EXCHANGE 


Intoratg  of 

GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  I.  ANALYSIS  OF  THE  PRODUCT 

BY 

MAC  MARTIN 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  8.    JANUARY  1914 


Entered  at  the  Post  Office 

Minneapolis  as  second-class  matter 

Minneapolis.  Minn. 


GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  I.  ANALYSIS  OF  THE  PRODUCT 

BY 

MAC  MARTIN 
n 

PROFESSORIAL  LECTURER  IN  ADVERTISING,  PRESIDENT  MINNEAPOLIS 

ADVERTISING  FORUM,  MEMBER  EXECUTIVE  COMMITTEE 

ASSOCIATED  ADVERTISING  CLUBS  OF  AMERICA 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  8.    JANUARY  1914 


Entered  at  the  Post  Office 

Minneapolis  as  second-class  matter 

Minneapolis,  Minn. 


COPYRIGHT  1914 
THE  UNIVERSITY  OF  MINNESOTA 


PLAXXIXG    AN    ADVERTISING    CAMPAIGN 
FOR  A  MANUFACTURER 

PART  I.    ANALYSIS  OF  THE  PRODUCT 

A.  Demand 

B.  Supply 

C.  Quality 

D.  Prices 

E.  Profits 

P4RT  II.    ANALYSIS  OF  THE  MARKETS 

A.  Geographical 

B.  Climatic 

C.  Seasonal 

D.  Social 

E.  Financial 

F.  Competitive 

G.  Distributive 

PART  III.    ANALYSIS  OF  THE  CHANNELS  OF  DISTRI- 
BUTION 

PART  IV.    ANALYSIS  OF  THE  MEDIA 

PART  V.     DETERMINING  THE  AMOUNT  OF  MONEY 
TO  BE  SPENT 

PART  VI.     PREPARING  THE  ADVERTISEMENTS  FOR 

EACH  MEDIUM 

316964 


PART  1.  ANALYSIS  OF  THE  PRODUCT  TO  BE 
ADVERTISED 

Each  student  is  to  choose  a  product  with  which  he  is  familiar 
and  which  he  may  wish  to  advertise.  This  course  from  the  first 
lecture  to  the  last  will  consist  in  preparing  a  campaign  to  adver- 
tise that  particular  product. 

Name  of  Product  and  Brief  Description  of  Its  Uses 


Please  answer  as  many  of  these  questions  as  refer  to  your  par- 
ticular product.  In  cases  where  more  than  one  question  is  asked 
in  a  sentence,  if  you  can  answer  the  first  part  of  the  question  in 
the  affirmative,  you  will  probably  find  your  product  more  adapt- 
able to  extensive  advertising. 

A.  DEMAND — 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  chap.  1,  p.  48 
A.  W.  Shaw  Company,  How  to  Write  Advertisements  that  Sell,  pp 

10-13. 

De  Weese,  Truman  A.,  Principles  of  Practical  Publicity,  pp.  7-13. 
Fowler,  R.  K,  Printers'  Ink,  Feb.  8,  1912,  p.  54. 

1.  Is  the  demand  developed? undeveloped? or 

overdeveloped? :.;. pp.  11-14. 

2.  Is  the  product  a  necessity? or  a  luxury?.  .  .  .pp.  14-15. 

3.  Is  it  a  staple? or  a  novelty? pp.  15-17e 

4.  Is  it  a  "repeater"  ? -. . .  or  can  but  one  sale  be  made  to 

each  customer? ; pp.  17-19. 

4 


OUT  LI  ^  5 

.      5.  Is  it  a"  "year-round  seller"? or  "seasonable"? 

pp.  19-20. 

Deland,  Lorin  F.,  Imagination  in  Business,  pp.  42-51. 
Printers'  Ink,  April  24,  1913,  p.  27. 

6.  What  is  the  present  annual  consumption? pp.  20-21. 

Mahin  Advertising  Data  Book,  1913-1914,  pp.  424-26 

B.  SUPPLY — 

1.  What  is  the  present  total  capacity  of  your  plant? p.  22. 

2.  Raw  material 

a.  Is  your   supply   of   raw  materials   steady   in   amount? 

or  in  danger  of  becoming  soon  exhausted? 

p.  23. 

b.  Is  your  supply  of  raw  materials  steady  in  price? 

or  fluctuating  ? pp.  23-24. 

3.  Labor 

a.  Is  your  supply  of  labor  "open  shop"  ? 

or  "union"  ? p.  24. 

b.  Is  the  larger  proportion  of  your  labor  skilled? 

or  unskilled  ? pp.  24-25. 

4.  Management 

a.  Does  final  word  in  management  of  details  of  your  ad- 

vertising depend  upon  one  man? 

or  a  group  of  men  ? pp.  26-27. 

b.  Does  management  consider  advertising  as  an  invest- 

ment ? an  expense  ? or  a  gamble  ? 

pp.  27-28. 


^'ADVERTISING  CAMPAIGN 

c.  Will  the  personal  conceit  or  tastes  of  the  rnanagement 

affect  the  advertising? pp.  29-30. 

d.  Is  the  sales  force  well  organized? pp.  30-31. 

e.  Will  the  management  of  the   sales   and  manufactur- 

ing departments  cooperate  with  ? 

or  dictate  to  the  advertising  department? p.  31. 

Hoyt,  Charles  W.,  Scientific  Sales  Management,  pp.  65-165. 

f .  Can  the  management  be  duplicated  ? 

or  is  it  dependent  upon  the  knowledge  and  ability  of 
one  individual  ? pp.  31-32. 

5.  Capital 

a.  What  per  cent  of  increase  in  the  present  demand  will 

the  capital  accommodate? p.  32. 

b.  How  much  of  an  investment  in  "good  will"  will  the 

present  capital  accommodate? pp.  32-34. 

Printers'  Ink,  Oct.  31,  1912,  p.  4. 

C.  QUALITY— 

1.    The  substance  itself 

The  American  Medical  Association,  Nostrums  and  Quackery. 

a.  Can    it   be   improved    upon    in    quality    of    material*? 

or  workmanship? pp.  35-37. 

b.  Can  your  article  advisedly  be  made  more  attractive  to 

the  ultimate  consumer  through  sight  ? 


OUTLINE  7 

touch  ? taste  ? hearing  ? 

or  smell  ? pp.  37-38. 

Scott,  Walter  Dill,  The  Theory  of  Advertising,  pp.  208-28. 
c.  Can  it  be  made  more  convenient  for  any  of  its  uses  in 

substance  ? in  size  ? or  in  shape  ? 

pp.  38-39. 

2.  The  name 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp. 
49-50. 

Rogers,    E.    S.,    Mahin    Advertising    Data    Book,    1913-1914, 
pp.  391-402. 

Chapman,   Clowry,  The  Law  of  Advertising  and   Sales,  pp. 
276-356. 

a.  Must  the  consumer  call  for  your  product  by  one  or  more 

names  ? pp.  40-41 . 

b.  Can  the  name  be  protected  as  a  trademark? 

pp.  41-42. 

c.  Is  it  distinctive  ? p.  42. 

d.  Does  it  relate  to  the  product? its  uses? 

or  associations? in  sound? or  in 

meaning  ? p.  43. 

e.  Is  it  easy? or  hard  to  pronounce? p.  43. 

f.  Is  it  short? or  long? p.  43. 

3.  The  container,  cover,  label,  or  package 

Cherington,    Paul   Terry,    Advertising  as   a    Business    Force, 

p.  51. 
Chapman,  Clowry,  The  Law  of  Advertising  and  Sales,  pp.  259- 

61,  359-60,  486-87. 

a.  Is  it  distinctive  ? p.  44. 


8  PLANNING  AN  ADVERTISING  CAMPAIGN 

b.  Is  it  convenient  for  all  of  the  purposes  to  which  it  may 

be  put? p.  45. 

c.  Is  it  in  any  way  related  to  the  name? or  the 

article  ? its  uses  ? or  its 

claims? in  color? in  shape? 

or  in  style  of  type? pp.  45-46. 

Miinsterberg,  Hugo,  Psychology  and  Industrial  Efficiency,  pp. 
272-81. 

D.  PRICES— 

1.  Do  you  allow  quantity  discounts? .pp.  47-48. 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  p.  36. 

2.  Are   your   prices   to   the    consumer   maintained   or   cut? 

pp.  48-49. 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp. 

252-55,  273-79,  380-428. 
Fernley,  Thomas  A.,  Price  Maintenance. 

3.  How  do  your  prices  compare  with  competition  in  the  fol- 

lowing : 

a.  To  jobbers  lower? the  same? or  higher? 

p.  49. 

b.  To  retailers  lower? the  same? or 

higher? p.  49. 

c.  To  consumers  lower? the  same? or 

higher? p.  49. 

Cherington,  Paul  Terry,  Advertising  as  a   Business  Force,  pp. 
386-90. 


OUTLINE 


E.  PROFITS— 


Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp.  128- 

34,  209-10,  434. 
The  Curtis  Publishing  Co.,  Selling  Forces,  pp.  103-44. 

How  do  your  profits  compare  with  competition  in  the  follow- 
ing: 

1.  For  the  manufacturer  (yourself)  higher? 

the  same? lower? pp.  50-51. 

2.  For  the  jobber  higher? the  same? 

lower? pp.  50-51. 

3.  For  the  retailer  higher? the  same? 

lower? pp.  50-51. 


PLAXXIXG    AN    ADVERTISING    CAMPAIGN 
FOR  A  MANUFACTURER 

It  will  not  be  my  purpose  in  these  lectures  to  lay  down  any 
hard  and  fast  rules.  Rules  are  not  of  one  man's  making. 

I  will  simply  attempt  to  tell  how  some  others  have  answered 
some  of  the  questions  which  should  be  asked  before  the  question, 
''How  shall  I  advertise,"  can  be  answered.  You  can  then  draw 
your  own  conclusions  as  to  whether  or  not  these  answers  will 
help  you  to  answer  these  same  questions  in  relation  to  that  which 
you  have  to  advertise. 

Some  of  these  questions  will  not  apply  to  your  business.  You 
may  not  care  to  ask  them  in  this  order.  Certain  answers  may 
affect  some  businesses  more  seriously  than  others. 

I  do  not  say  that  these  are  all  of  the  questions  which  must  be 
answered.  But  I  do  insist  that  you  put  yourself  in  the  position  of 
the  owner  of  some  product  you  may  wish  to  advertise. 

Let  us  commence  now  at  the  very  beginning  to  plan  your  ad- 
vertising campaign. 

PART  I.  ANALYSIS  OF  THE  PRODUCT 

\Ye  will  first  begin  by  asking  a  few  questions  about  the  article 
or  product  itself. 

A.    DEMAND 

1.     Is    THE    DEMAND    DEVELOPED,     L'XDEVELOPED,    OR    OVER- 
DEVELOPED ? 

R.  E.  Fowler,  advertising  manager  of  the  Printz-Bredemand 
Company,  of  Cleveland,  in  commenting  upon  a  similar  analysis 
says.  "The  first  question  is  'is  the  demand  developed  or  unde- 
veloped' and  upon  this  may  rise  or  fall  the  success  of  your  ven- 
ture. If  the  answer  should  be  'developed,'  you  immediately  know 
that  the  heavy  expense  of  an  educational  campaign  will  be  elinii- 


12  ANALYSIS  OF  THE  PRODUCT 

nated  from  your  calculations  and  your  plan  will  be  to  convince 
the  jobbers,  dealers,  and  consumers  that  your  product  is  desirable. 
On  the  other  hand  this  answer  to  this  question  immediately  brings 
into  the  scene  the  element  of  competition  with  established  con- 
cerns." 

Although  creating  new  demands  is  one  of  the  recognized 
functions  of  advertising,  the  fact  that  the  mind  of  the  masses 
moves  slowly  must  be  taken  carefully  into  consideration. 

My  father  tells  me  that  he  first  used  a  telephone  in  1878.  He 
did  not  feel  the  need  of  a  telephone  in  his  office  until  1886  and  it 
was  not  until  1898  (and  then  only  after  strong  urging  from  the 
younger  generation)  that  he  felt  the  need  of  a  telephone  in  his 
home.  It  required  twenty  years  to  educate  my  father  to  the  use 
of  the  telephone  in  his  home.  Yet  now  that  that  demand  has 
been  created  my  father's  children  and  his  children's  children  will 
ever  after  pay  monthly  toll  to  the  genius  and  the  perseverance  of 
the  inventor  of  the  telephone. 

In  1890  when  Edison  first  outlined  the  advantages  to  the  world 
which  would  result  from  his  new  invention,  the  phonograph,  he 
laid  particular  stress  on  its  possible  use  in  business  correspond- 
ence, yet  it  was  twenty  years  before  business  men  seemed  to 
develop  any  considerable  demand  for  talking  machines. 

When  the  Thermos  bottle  was  introduced  by  William  B. 
Walker  in  1907  there  was,  of  course,  no  developed  demand.  A 
carefully  planned  educational  campaign  of  advertising  was  con- 
ducted, yet  it  was  not  until  the  beginning  of  1913  that  any  appre- 
ciable demand  for  Thermos  bottles  was  developed  among  me- 
chanics for  use  with  their  dinner  pails — the  class  of  demand  which 
will  probably  be  its  greatest  and  the  use  which  would  appear  to 
the  outsider  as  the  most  evident. 

It  is  interesting  to  note  what  the  same  man  is  able  to  do  with 
an  article  for  which  the  demand  has  already  been  developed.  In 
the  later  part  of  1912  William  B.  Walker  began  to  put  the  Mark 
Cross  safety  razor  on  the  market.  With  the  aid  of  a  developed 
demand,  a  well-planned  advertising  campaign,  and  a  startlingly 
low  price,  the  sale  of  Mark  Cross  razors  in  New  York  City  alone 
amounted  to  over  98,000  the  first  day.  The  sale  for  the  first 
three  days  in  New  England  and  New  York  state  reached  the 
startling  figure  of  2,000,000. 


DEMAND  13 

It  must  be  borne  in  mind  that  a  low  price  greatly  assists,  and 
a  high  price  often  retards,  the  development  of  demand.  (The  mat- 
ter of  price  will  be  taken  up  in  a  later  chapter,  page  47.)  There 
are  some  people  who  can  be  made  to  buy  just  because  the  price  ap- 
pears low.  There  were  enough  Thermos  bottles  sold  to  automo- 
bilists  at  $7.50  to  $12.50  to  keep  the  American  Thermos  Bottle 
Company  running  at  full  capacity,  but  it  was  not  until  the  price 
reached  $1  to  $2.50  that  the  demand  of  the  laboring  classes  began 
to  be  felt.  Mr.  Walker's  own  words  in  relation  to  how  quickly  the 
demand  was  created  through  advertising  are  interesting.  He  says, 
"New  manufacturing  concerns  usually  spend  $200,000  or  $300,000 
and  wait  three  or  four  years  to  establish  a  demand  for  their  prod- 
uct and  see  their  money  coming  back.  From  the  moment  we  took 
six  full-page  spreads  in  the  New  York  City  papers,  to  tell  about 
the  Thermos  bottle,  we  have  never  caught  up  with  the  demand.'* 

Mr.  Walker's  success  with  the  Thermos  bottle  in  an  educa- 
tional campaign  to  develop  demand  is  no  more  remarkable  than 
his  success  with  the  Mark  Cross  safety  razor  with  a  developed 
demand  but  in  the  face  of  a  supposedly  well-supplied  market. 

When  you  are  considering  the  question  of  the  extent  of  the 
development  of  your  demand,  it  is  well  also  to  consider  whether 
or  not  the  demand  has  not  been  overdeveloped.  Others  in  the 
field  may  have  already  forced  the  demand  to  such  an  extent  that 
it  is  now  at  the  zenith  and  you  may  be  entering  just  when  a  fall- 
ing-off  is  about  to  begin.  If  you  had  entered  the  bicycle  busi- 
ness in  1898,  you  might  have  encountered  such  an  experience. 

I  remember  distinctly  the  expressions  of  high  hopes  and  con- 
gratulations when  my  father  left  the  practice  of  law  and  entered 
the  real  estate  business  in  Minneapolis  in  1887.  For  the  few 
years  previous,  my  father's  friends  had  all  been  getting  rich  in 
Minneapolis  real  estate.  Two  of  his  clients,  mere  boys  still  in 
their  teens,  had  each  cleared  over  $100,000  during  the  two  years 
previous.  As  these  two  boys  (for  some  reason  known  only  to 
themselves)  had  developed  a  sudden  desire  to  quit  business  and 
go  to  college,  my  father  was  given  the  opportunity  to  buy  them 
out  and  to  start  in  with  what  was  recognized  as  the  leading 
real  estate  business  in  this  great  and  booming  western  city.  Was 
there  ever  such  an  opportunity?  Hopes  were  high.  Yet  they 
soon  began  to  tumble.  The  high-water  marks  in  Minneapolis 


14  ANALYSIS  OF  THE  PRODUCT 

real  estate  had  been  reached.  The  demand  had  been  overdevel- 
oped. I  remember  distinctly  the  day  when  one  of  my  playmates 
had  given  me  the  explanation  but,  not  understanding  it  any  better 
than  before,  I  ran  home  to  my  mother  and  brought  tears  to  her 
dear  eyes  when  I  said,  "Mamma,  what  does  it  mean  when  'the 
bottom  drops  out  of  the  boom'?" 

You  will  always  find  someone  to  tell  you  that  every  business 
is  overcrowded  and  that  every  demand  is  abnormally  developed. 
As  early  as  1905  there  were  people  who  predicted  doom  to  the 
automobile  business.  Those  who  seemed  to  think  five  years  ago 
that  the  moving  picture  business  was  at  its  zenith,  to-day  admit 
that  it  still  is  only  in  its  infancy. 

There  are  several  ways  to  test  a  demand  in  advance. 

It  is  said  to  be  no  uncommon  thing  among  technical  book 
concerns  to  send  out  a  few  thousand  letters  soliciting  orders  for 
the  book  exactly  as  though  it  was  printed,  before  a  single  line  of 
a  book  is  written.  If  the  demand  is  not  sufficient,  the  book  is  not 
published.  Whether  the  book  is  published  or  not,  the  money  is 
always  returned  immediately  with  a  note  explaining  that  the  pub- 
lication has  been  delayed  or  indefinitely  postponed  (as  the  case 
may  be)  and  that  the  subscriber  will  be  again  notified  when  the 
book  is  "off  the  presses." 

When  Crawford  Marmaduke  built  the  fourteen-story  Alaska 
Building  in  Seattle,  a  city  of  not  more  than  125,000  population 
in  1904,  his  old  St.  Louis  friends  encouraged  him  by  telling  him 
that  he  was  crazy.  But  Mr.  Marmaduke  had  taken  no  chance 
with  the  possible  demand.  He  had  had  his  architect's  plans  and 
sketch  reproduced  in  an  attractive  prospectus  and  had  had  every 
room  in  the  great  office  building  rented  before  the  first  stone  of 
the  foundation  was  laid. 

2.  Is  THIS  PRODUCT  A  NECESSITY  OR  A  LUXURY  ? 

Wrhile  many  fortunes  have  been  made  through  supplying  the 
world  with  luxuries,  the  greatest  and  the  most  lasting  institu- 
tions have  been  built  up.on  supplying  people  with  things  they 
must  have.  The  great  impetus  which  advertising  has  gained  in 
the  last  half  century  is  in  part  due  to  the  fact  that  instead  of  using 
this  influence  only  to  sell  patent  medicines,  fortune  tellers'  arts, 
and  such  things  it  is  now  used  to  sell  food,  shelter,  and  clothing. 


DEMAND  15 

As  civilization  advances  it  is  hard  for  us  to  distinguish  the 
luxury  of  yesterday  from  the  necessity  of  to-day.  The  demand 
for  necessities  is  universal,  while  the  demand  for  luxuries  must 
always  be  limited  by  the  purchasing  power  of  the  individual. 

We  eat  up  to-day  the  food  we  bought  yesterday.  We  wear 
out  the  clothing  and  we  consume  the  fuel  we  bought  a  few  months 
ago.  We  must  always  come  back  for  more. 

There  is  much  more  momentum  in  the  demand  for  a  necessity 
than  there  can  be  for  a  luxury  even  when  price  is  not  a  considera- 
tion. 

3.     Is  THIS  PRODUCT  A  STAPLE  OR  A  NOVELTY? 

Many  advertisers  can  not  forget  the  story  of  the  man  who 
made  a  fortune  by  inventing  a  game  called  "Pigs-in-ciovet." 
They  do  not  stop  to  ask  themselves  how  much  they  would  be 
willing  to  pay  for  stock  in  his  company  to-day. 

The  American  people  are  said  to  be  novelty  crazy.  Fortunes 
have  been  made  by  catching  the  public  fantasy.  Through  the 
influence  of  a  tremendous  amount  of  advertising  a  demand  for 
a  novelty  can  be  created.  Yet  the  sale  of  a  novelty,  requiring  a 
heavy  investment  either  in  machinery  or  advertising,  is  a  very 
hazardous  business  in  which  to  engage. 

If  you  wish  permanently  to  engage  in  a  business  built  on 
public  fantasy,  two  things  are  quite  essential:  (1)  that  you  have 
in  readiness  some  other  novelty  which  you  can  produce  with  the 
same  organization,  and  (2)  that  you  prepare  yourself  to  "gei 
out  from  under"  when  the  fickle  fantasy  of  the  public  begins  to 
change. 

Mr.  Joseph  Strong,  of  Strong  and  Warner,  Milliners,  is  inter- 
ested in  nearly  fifty  retail  .millinery  stores  situated  in  different 
parts  of  the  United  States.  He  conducts  the  advertising  himself 
in  each  of  these  stores  every  day  from  his  office  in  St.  Paul. 

Xow  the  millinery  business  is  built  entirely  on  the  fleeting 
fantasy  of  Her  Royal  Highness,  the  Lady-of-the-Fashion.  The 
hat  is  considered  a  necessity,  to  be  sure,  but  the  particular  shape 
and  color  of  a  hat  which  her  ladyship  will  wear  or  discard  depends 
entirely  upon  her  fantasy  or  the  "fantasy  of  the  season." 

Milliners  spend  thousands  of  dollars  to  determine  in  advance 
what  the  "fantasy  of  the  season"  will  be,  but  there  are  always 


16  ANALYSIS  OF   THE  PRODUCT 

some  shapes  and  colors  which  do  not  sell  as  well  as  others  and, 
despite  Dame  Fashion's  rigid  dictates,  tastes  seem  to  vary  in 
different  localities.  Mr.  Strong  receives  daily  reports  on  chart 
sheets  from  each  of  his  stores  on  just  how  each  of  that  season's 
shapes  is  selling  in  each  color  at  each  price. 

When  the  season  is  advancing  and  he  sees  that  in  certain  cities 
certain  shapes  and  certain  colors  at  certain  prices  are  not  selling, 
he  draws  a  line  across  his  chart  of  shapes  and  colors,  running  it 
up  and  down  with  the  prices,  and  announces  that  all  hats  falling 
in  the  chart  below  the  line  shall  sell  at  a  certain  reduced  price 
while  all  those  above  the  line  shall  remain  at  their  former  prices. 
Thus  all  purple  hats  of  shape  No.  1,  selling  as  high  as  $12,  all 
black  hats  of  the  same  shape  selling  as  high  as  $10,  and  all  purple 
hats  of  shape  No.  2  selling  as  high  as  $9,  and  all  white  hats  of 
shape  No.  2  selling  at  $6,  shall  sell  at  $5  until  further  notice. 

If  a  week  goes  by  and  still  there  are  hats  in  this  lot  which 
do  not  move  fast  enough,  he  may  draw  another  line  still  higher 
up  on  the  price  scale  and  offer  still  higher  priced  hats  for  $5  or 
he  may  use  the  same  line  and  cut  to  $4.  In  making  these  cuts 
he  never  regards  the  original  manufacturing  cost,  basing  his 
prices  only  on  demand,  knowing  full  well  that  a  novelty  out  of 
season  has  practically  no  value  in  the  eyes  of  the  public. 

A  high  school  classmate  of  mine  and  his  father-in-law  be- 
came partners  in  the  first  organization  to  sell  physical  culture 
training  by  mail.  It  was  a  wonderful  success  while  it  lasted. 
I  can  remember  distinctly  visiting  my  friend  in  his  palatial  offices 
in  Chicago  a  few  months  after  I  left  college.  I  had  come  to  that 
city  with  a  total  capital  of  $4  in  my  pocket  and  was  looking  for 
a  job.  I  sat  humbly  by  and  watched  my  friend  open  his  morning 
mail.  It  was  brought  in  in  a  good-sized  wastebasket,  and  the 
basket  was  filled  to  the  brim,  I  watched  him  take  out  twenty- 
dollar  bills,  money  orders,  and  gold  pieces  until  my  head  swam. 

He  had  no  capital  invested  in  equipment  or  machinery  of 
any  kind.  He  told  me  he  was  spending  for  his  advertising 
$100,000  a  year.  Now  that  I  think  of  it  I  do  not  suppose  he 
made  a  profit  of  more  than  $50,000  a  year,  but  at  that  time  it 
seemed  as  though  there  was  a  million  dollars  before  my  very  eyes. 

About  a  year  after  the  time  of  my  call  this  advertising 
stopped. 


DEMAND  17 

In  the  meantime  my  friend  had  attempted  to  sell  a  course 
in  legerdemain  by  mail  and  had  spent  considerable  money  in 
an  attempt  to  popularize  a  corn  cure,  both  of  which  ventures 
proved  unprofitable. 

A  year  later  one  more  advertisement  for  the  physical  culture 
business  appeared  and,  as  I  was  rather  surprised  to  see  it,  I 
inquired  and  learned  that  the  physical  culture  business,  while  no 
longer  profitable  when  promoted  on  a  large  scale,  was  "not  quite 
dead"  and,  as  my  friend  expressed  it,  "is  being  milked  carefully 
for  what  there  is  still  in  it." 

4.     Is  THE  PRODUCT  A  "REPEATER"  OR  CAN  BUT  ONE  SALE  BE 
MADE  TO  A  PERSON? 

In  estimating  the  yearly  demand  for  your  product  it  is  quite 
important  to  determine  how  soon  a  satisfied  customer  will  come 
back  for  more. 

Is  your  product  of  such  a  nature  that  but  one  sale  can  be 
made  to  a  customer  in  that  customer's  lifetime ;  will  that  customer 
buy  twice  or  three  times  in  a  lifetime ;  will  the  customer  buy  once 
a  year,  once  a  month,  or  possibly  once  each  week? 

You  may  get  well  under  way  in  your  advertising  and  suddenly 
discover  that  you  have  sold  every  person  in  your  market  who 
cares  to  buy  and  that  to  sell  more  you  will  be  compelled  to  wait 
for  a  new  generation. 

It  often  costs  more  than  the  selling  price  to  gain  the  con- 
fidence of  a  customer.  The  profit  in  most  businesses  is  in  the 
re-orders.  The  business  which  finds  itself  in  the  position  of 
having  a  new  market  of  already-convinced  customers  every  six 
months  has  a  great  advantage  over  the  concern  which  must 
wait  a  year  for  a  new  market. 

It  is  often  possible  through  a  little  ingenuity  to  change  a  "one 
time  sale"  article  into  a  quite  active  repeater. 

There  is  a  man  by  the  name  of  King  C.  Gillette  who  has 
played  this  trick  on  the  entire  civilized  world. 

We  can  all  remember  the  razors  our  fathers  used  to  prize. 
They  not  only  lasted  a  lifetime  but  were  known  to  improve  with 
age.  The  razor  your  father  prized  the  most  was  the  sacred  one 
you,  as  a  boy,  were  never  allowed  to  touch — only  to  look  at  with 


18  ANALYSIS   OF   THE   PRODUCT 

wonder  and  admiration.     It  had  been  your  grandfather's  razor. 
You  were  told  that  some  day  it  would  be  yours. 

The  cutlery  business  was  then  centered  around  Sheffield, 
England ;  it  was  said  to  be  very  profitable ;  the  population  of 
the  world  increases  so  fast  that  the  demand  seemed  always  to 
be  growing;  and  I  do  not  suppose  it  ever  occurred  to  the  steel 
barons  of  Sheffield  that  anyone  could  tell  them  anything  about 
the  razor  business. 

Just  then  (it  always  happened  just  then)  along  came  a 
Yankee  who  separated  the  blade  from  the  stock,  called  the  atten- 
tion of  the  world  to  the  time  it  was  wasting  every  morning  in 
stropping  and,  instead  of  selling  us  a  razor  at  $2.50  to  $3.50 
which  would  last  for  generations,  succeeded  in  separating  us 
from  $5  now  and  $1  for  new  blades  every  six  months  or  so 
thereafter  for  the  rest  of  our  natural  lives.  Whether  we  buy 
blades  for  the  rest  of  our  lives  from  Gillette  or  from  someone 
else,  it  was  Gillette  who  got  us  into  this  expensive  habit  and 
made  his  millions  by  putting  the  element  of  repeat  into  the 
razor  business. 

There  are  fortunes  still  awaiting  the  men  who  are  clever 
enough  to  increase  the  element  of  repeat  in  any  business. 

Among  the  professions,  in  the  real  estate  business,  and  in  the 
different  retail  lines  the  element  of  repeat  is  encouraged  by  the 
building  of  a  clientele. 

While  for  manufacturing  reasons  it  is  not  advisable  to  engage 
in  two  separate  lines  of  business,  if  you  have  an  article  without 
the  element  of  repeat,  perhaps  you  can  find  some  other  article 
which  has  the  element  of  repeat  which  you  can  sell  with  your 
article.  This  is  the  method  employed  by  the  American  Multi- 
graph  Sales  Company. 

During  the  last  few  years  much  has  been  heard  of  the  "Family 
of  Products  Idea."  After  a  reputation  for  one  product  has  been 
established,  it  seems  to  be  easier  to  create  a  demand  for  another 
product  under  the  same  family  name  than  to  commence  from  the 
beginning  again  and  attempt  to  establish  a  demand  under  a  new 
name.  Thus  we  have  "Quaker  Oats,"  "Quaker  Puffed  Rice," 
"Quaker  Puffed  Wheat,"  and  so  on  throughout  the  rest  of  the 
family. 

Your  article  may  have  a  wonderful  element  of  repeat  in  the 


DEMAND  19 

beginning  but  one  of  which,  for  the  very  reason  of  its  constant 
use.  the  public  may  soon  tire.  In  such  a  case  you  are  very 
fortunate  if  you  can  introduce  another  member  of  the  family. 

Oftentimes  articles  which  appear  to  every  one  to  have  a 
primary  element  of  repeat  are  found  on  investigation  to  be  re- 
garded in  the  eyes  of  the  public  as  mere  novelties. 

If  you  are  not  satisfied  on  this  point  in  relation  to  your  article, 
it  may  be  advisable  to  spend  some  money  in  an  investigation. 

There  are  many  ways  to  make  such  investigations.  They  are 
all  based  on  the  law  of  averages. 

Do  as  a  chemist  would  do. 

Take  a  small  cross  section  sample  of  your  list  of  customers. 
test  it  under  circumstances  exactly  similar  to  those  which  would 
exist  in  normal  conditions  (not  letting  any  of  your  list  know 
that  they  are  being  experimented  with)  and  you  can  determine 
quite  accurately  the  percentage  of  repeat  in  your  business. 

You  can  not  tell  in  advance  how  many  times  during  a  year 
any  individual  in  your  town  will  buy  a  certain  article  any  more 
than  you  can  tell  just  when  that  individual  will  die. 

But  it  is  entirely  different  with  the  average  of  a  group  of 
indh-idiials.  You  can  determine  within  a  fraction  of  one  per 
cent  how  many  people  will  die  in  your  town  next  year  or  the 
year  after.  The  death  rate  in  your  town  has  probably  not  varied 
one  half  of  one  per  cent  in  the  last  twenty  years. 

If  you  have  a  million  in  your  possible  market,  test  one  thou- 
sand and,  if  your  test  is  made  correctly,  you  can  pretty  accu- 
rately gage  from  the  thousand  what  the  million  will  do. 

One  way  to  test  the  repeat  of  an  article  is  to  get  a  list  of 
purchasers  with  the  dates  that  they  first  purchased,  if  possible, 
send  them  a  letter  with  a  stamped  return  postal  card  (it  is  often 
advisable  to  insure  a  reply  to  offer  as  a  further  inducement  a 
free  sample  of  some  other  article  in  your  line),  ask  if  they  are 
still  using  your  article  and  how  many  times  to  the  best  of  their 
memory  they  have  re-ordered. 

5.     Is  YOUR  PRODUCT  A  "YEAR-ROUND  SELLER"  OR  SEASONABLE? 

\Yhether  your  article  is  a  repeater  or  not  there  may  be  certain 
times  of  the  year  in  which  the  demand  is  greatest.  There  may  be 


20  ANALYSIS  OF   THE  PRODUCT 

other  times  in  which  there  is  no  sale  for  your  article.  You  may 
or  you  may  not  be  able  to  overcome  this  condition. 

One  of  the  efforts  of  modern  business  efficiency  is  what  the 
electricians  call  "superimposing  the  peak  upon  the  valley."  That 
is,  raising  the  sale  in  the  dull  season  and  lowering  it,  if  necessary, 
in  the  good  season  to  make  a  more  even  output  the  year  round. 
You  can't  sell  ice  skates  in  the  summer  but  you  can  make  ice 
skates  and  roller  skates  in  the  same  factory. 

Probably  the  greatest  thing  which  Artemas  Ward,  the  great 
general  of  advertising  in  the  last  century,  ever  did  was  to  take 
Sapolio  out  of  the  class  of  seasonable  articles  and  make  it  a 
year-round  seller.  Mr.  Ward  says,  "When  I  began  the  work 
of  advertising  Sapolio,  the  sales  in  May  and  September  were 
nearly  double  those  of  the  other  ten  months.  I  believed  this 
could  be  changed  and  it  was  changed.  Through  steady  and  per- 
sistent advertising  the  sales  in  the  slow  months  were  so  increased 
that  all  months  came  to  look  alike  to  Sapolio.  That  is  one  of  the 
great  things  advertising  will  do.  It  will  make  business  good 
in  seasons  that  without  advertising  are  dull." 

Mr.  Bert  M.  Moses  in  commenting  on  this  feat  in  Printers' 
Ink  says,  "Making  two  blades  of  grass  grow  where  but  one 
grew  before  is  commendable,  but  to  make  twelve  scrubbings 
grow  where  but  two  grew  before  is  a  vastly  greater  accomplish- 
ment." 

6.     WHAT  Is  THE  TOTAL  PRESENT  ANNUAL  CONSUMPTION  OF 
THIS  CLASS  OF  PRODUCT? 

This  is  a  question  which  in  most  cases  is  very  hard  to  answer, 
but  it  is  startling  to  find  how  few  advertisers  have  given  it  a 
thought.  How  can  you  determine  your  share  of  the  demand, 
how  can  you  estimate  your  market,  unless  you  know  what  is  the 
present  total  consumption? 

If  your  article  is  a  new  invention,  perhaps  it  is  designed  to 
supplant  a  certain  article  now  used.  As  a  stepping-stone  first 
determine  the  consumption  of  the  article  you  are  to  supplant. 
Census  reports  give  much  of  this  information;  or  it  may  pay 
you  to  make  a  special  investigation  of  your  own.  You  can  not 
always  determine  whether  or  not  a  line  of  goods  is  profitable 


DEMAND  21 

by  the  amount  of  advertising  or  the  amount  of  business  one's 
competitors  seem  to  be  doing. 

Mr.  Harry  Tipper,  advertising  manager  of  the  Texas  Oil 
Company  and  special  lecturer  on  Advertising  at  the  University 
of  New  York,  has  found  some  interesting  facts  as  a  result  of 
such  an  investigation.  It  was  in  connection  with  the  utilization 
of  a  certain  by-product  of  oil  for  the  manufacturing  of  some 
household  goods.  An  enlargement  of  the  plant  and  an  adver- 
tising expenditure  of  from  $15,000  to  $20,000  besides  a  consid- 
erable additional  sales  force  was  proposed.  The  investigation, 
however,  showed  that  the  total  consumption  of  the  article  in 
question  in  the  field  proposed  would  not  absorb  more  than  one 
fourth  or  one  fifth  of  the  capacity  of  the  present  plant  and  that 
competitors  were  evidently  carrying  the  line  at  a  loss  hoping 
to  build  it  up. 

This,  of  course,  is  an  extreme  case  but  it  shows  the  necessity 
of  asking  yourself  this  question. 

Before  we  take  up  the  next  subject,  that  of  your  ability  to 
supply  the  demand  which  your  advertising  will  create,  are  there 
not  some  other  questions  which,  on  account  of  the  particular 
nature  of  your  product,  you  will  wish  to  ask  yourself  about  your 
possible  demand? 

It  is  said  that  when  the  telegram  came  saying  that  France 
had  declared  war  on  Prussia — the  great  Franco-Prussian  war — 
Von  Moltke  was  asleep.  A  messenger  was  dispatched  to  awaken 
him,  but  Von  Moltke  simply  said,  "You  will  find  the  plan  of  cam- 
paign in  the  third  drawer  of  my  desk,"  and  then  turned  over 
and  went  to  sleep  again.  He  had  estimated  the  demand  upon  his 
forces  to  such  a  nicety  that  the  Prussians  went  out  with  that 
plan  and  defeated  the  great  French  nation  in  forty-five  days. 


B.  SUPPLY 

The  admonition  of  the  ancient  sage,  ''Know  thyself,"  was 
never  so  necessary  as  it  is  in  these  modern  days  of  advertising, 
in  fact  it  seems  to  be  the  necessity  of  obtaining  data  on  which 
to  plan  advertising  campaigns  which  has  brought  many  business 
men  to  a  more  thorough  study  of  their  businesses. 

In  considering  your  ability  to  supply  the  demand  which  you 
have  created  I  do  not  wish  to  be  understood  to  infer  that  the 
advertising  manager  or  the  advertising  agent  should  attempt  to 
direct  or  to  dictate  to  the  manufacturing  department. 

It  is  the  province  of  the  sales  and  advertising  departments 
to  sell  and  distribute  a  product, — no  more. 

But  one  can  not  properly  sell  and  distribute  any  product 
unless  he  knows  everything  that  is  to  be  known  about  the  quan- 
tity and  the  quality  of  that  product  from  the  very  beginning  of 
its  inception  until  it  is  finally  consumed. 

Bear  in  mind  that,  I  say  until  it  is  consumed,  not  until  it 
reaches  the  hands  of  the  ultimate  consumer.  Of  this  we  will 
talk  later  (Part  III,  A,  4.). 

The  supply  naturally  falls  under  four  heads :  ( 1 )  raw  ma- 
terials, (2)  labor,  (3)  management,  (4)  capital. 

Economists  tell  us  that  these  four  elements  mixed  in  proper 
proportions  make  any  product.  But  first  let  us  inquire : 

1.     WHAT  Is  THE  PRESENT  TOTAL  CAPACITY  OF  YOUR  PLANT? 

We  do  not  wish  to  endanger  your  success  by  creating  a 
demand  you  will  be  in  no  position  to  supply,  thus  making  possible 
enemies  of  those  who  wish  to  become  customers. 

A  friend  of  mine  once  left  a  good  position  to  become  sales 
and  advertising  manager  of  a  new  company  which  was  to 
manufacture  automobile  trucks.  He  was  to  draw  a  salary  and 
to  receive  in  addition  a  commission  on  every  truck  sold.  There 
seemed  to  be  a  large  market  in  that  territory  and  he  guaranteed 
to  sell  the  entire  output.  His  future  looked  bright.  Within  a 
short  time  he  had  sold  eighteen  trucks,  as  a  starter,  by  personal 
solicitation.  Then,  and  not  until  then,  the  superintendent  told  him 
that  the  plant  was  only  equipped  to  build  six  trucks  the  first  year 


SUPPLY  23 

and  that  more  capital  would  have  to  be  raised  and  a  larger  factory 
built  before  more  orders  could  be  taken. 

2.     RAW  MATERIAL 

a.  Is  your  supply  of  raw  materials  steady  in  amount  or  in  danger 

of  soon  becoming  exhausted? 

Several  years  ago  the  manufacturers  of  Coca-Cola  discov- 
ered that  the  supply  of  one  of  the  ingredients  used  in  the  manu- 
facture of  their  product  was  becoming  exhausted.  Millions  of 
dollars  had  been  spent  to  popularize  the  sale  of  that  ingredient 
mixed  in  a  certain  way  with  other  ingredients  and  called  Coca- 
Cola.  Some  manufacturers  would  have  taken  the  chance  of  leav- 
ing the  substance  out  of  the  formula  and  trusting  that  the  public 
would  not  notice  the  difference.  The  Coca-Cola  Company  had 
higher  business  principles  and  more  common  sense  than  to  do 
such  a  thing.  Experts  were  sent  to  search  the  world  for  a  sup- 
ply of  that  one  item  and,  when  it  was  found,  the  Coca-Cola  Com- 
pany bought  the  source  of  supply  and  immediately  arranged  for  a 
sufficient  annual  supply  to  meet  the  probable  demand  for  many 
years  to  come. 

b.  Is  your  supply  of  raiv  material  steady  in  price  or  fluctuating? 

The  greatest  danger  of  a  supply  of  raw  materials  which  is 
varying  in  amount  is  that  it  is  also  usually  fluctuating  in  price. 

If  the  price  of  wheat  did  not  fluctuate  it  would  be  possible 
to  put  up  flour  in  uniform  packages  at  $1  a  package.  It  is  much 
easier  to  sell  any  article  at  a  uniform  price.  When  the  price  is 
fluctuating  jobbers,  dealers,  and  consumers  are  all  prone  to  wait 
to  take  advantage  of  the  market. 

If  your  product  is  not  a  necessity  or  an  article  for  which  there 
is  a  strong  demand,  a  fluctuating  price  may  throw  your  product 
beyond  the  purchasing  power  of  your  customers  and  thus  destroy 
your  trade. 

One  of  the  best  ways  to  overcome  a  fluctuating  price  for  raw 
materials  is  to  put  so  much  into  the  additional  service  you  render 
the  consumer  that  you  can  put  your  selling  price  high  enough 
to  make  it  impossible  for  a  change  in  price  of  raw  materials  ever 
to  affect  your  selling  price. 

"Middlings"  has  a  fluctuating  price  in  the  open  market.    Yet 


24  ANALYSIS  OF  THE  PRODUCT 

Elmer  Mapes  and  Charles  Clifford  take  middlings,  put  it  through 
a  cleaning  process,  pack  it  in  a  neat  box,  name  it  Cream  of  Wheat, 
and  sell  it  for  15  cents  a  package.  You  can  buy  middlings  if 
you  want  it  this  morning  for  $21  a  ton. 

Granulated  sugar  costs  from  $4.75  to  $5.25  a  hundred  pounds. 
But  I  have  a  notion  that  for  coffee  you  prefer  Crystal  Domino 
Sugar  at  50  cents  for  a  5-pound  box — just  about  double  the  price 
of  sugar  in  bulk  without  the  service  of  having  it  made  "coffee 
size."  The  market  price  of  granulated  sugar  may  fluctuate,  and 
jobbers,  dealers,  and  consumers  may  wait  as  long  as  they  can  to 
take  advantage  of  the  market,  but  the  price  of  Crystal  Domino  is 
the  same  the  year  round  and  the  demand  is  said  to  be  as  steady 
as  the  consumption. 

3. .  LABOR 

a.  Is  your  labor  supply  "open  shop"  or  "union"? 

I  know  that  every  serious  minded  business  man  will  under- 
stand me  when  I  ask  this  question  and  will  apply  it  only  to  the 
extent  that  he  in  his  judgment  thinks  it  should  be  applied  to  his 
own  business. 

Some  day  labor  conditions  may  become  so  adjusted  that 
unionism  will  not  stand  for  strikes  and  disturbances.  But  until 
that  day  comes  it  is  the  duty  of  the  one  who  plans  the  advertising 
for  a  manufacturer  to  know,  before  he  contracts  for  the  ex- 
penditure of  hundreds  of  thousands  of  dollars,  if  there  is  any 
danger  of  the  labor  supply  suddenly  being  shut  off  by  a  strike. 

Please  do  not  understand  me  to  say  when  I  point  out  these 
apparent  hazards  that  if  there  is  any  danger  of  any  one  or  all 
of  them,  one  should  not  advertise.  That  would  be  just  as  foolish 
as  to  lock  your  doors,  throw  the  key  in  the  lake,  and  refuse 
to  run  your  factory  because  there  is  danger  some  day  of  fire. 
In  fact  there  are  cases  where  strikes  have  been  prevented  or 
settled  as  a  result  of  the  fact  that  a  concern  did  advertise,  was 
known  by  the  people,  and  had  always  taken  the  people  into  its 
confidence. 

b.  Is  the  larger  proportion  of  your  labor  skilled  or  unskilled f 

Some  classes  of  business  require  such  highly  skilled  labor 
that  progress  is  absolutely  limited  to  the  whims  or  preferences 


SUPPLY  25 

of  that  labor.  For  this  reason  the  business  which  is  not  depend- 
ent upon  skilled  labor  has  more  opportunities  to  supply  any 
demand  it  may  receive. 

There  are  very  few  classes  of  business  which  do  not  require 
a  certain  amount  of  money  and  a  certain  length  of  time  to  break 
in  a  new  operator. 

In  a  business  dependent  upon  seasons  the  element  of  time 
of  production  is  a  serious  consideration.  You  may  find  that  your 
advertising  has  created  a  demand  which  will  require  one  hundred 
new  operators  to  produce  your  supply ;  your  season  may  be  only 
six  weeks  and  it  may  take  you  eight  weeks  to  teach  these  new 
operators  to  produce  your  product  of  a  sufficient  quality  to  allow 
them  to  make  one  single  article. 

In  such  a  business  it  is  the  duty  of  the  sales  and  advertising 
departments  to  estimate  each  season's  demand  as  accurately  as 
possible  in  advance  so  that  the  manufacturing  department  can 
make  its  calculations. 

It  cost  the  Northwestern  Knitting  Company,  makers  of  "Mun- 
singwear,"  about  $100  to  teach  or  "break  in"  each  new  operator. 
The  underwear  seasons  are  very  short.  On  account  of  efficient 
advertising  the  demand  for  Munsingwear  has  been  increasing  by 
leaps  and  bounds,  sometimes  doubling  from  one  season  to  the 
next.  There  has  not  been  a  time  in  the  last  fifteen  years  when 
contractors  have  not  been  busy  building  one  addition  after  another 
to  the  factory.  The  greater  number  of  orders  from  dealers  is 
taken  six  months  in  advance  of  each  season,  but  there  is  an  in- 
creasing number  of  re-orders  which  come  in  at  the  last  minute 
and  must  be  reckoned  for  in  advance  to  supply  properly  the  sea- 
son's demand.  Each  season  throughout  all  these  years  Mr.  Wm. 
B.  Morris,  the  advertising  manager,  with  a  faith  in  advertising 
and  an  imagination  almost  superhuman,  has  gauged  the  demand 
so  nicely  that  at  the  end  of  no  season  has  the  company  ever  had 
an  appreciable  amount  of  stock  on  hand. 

4.     MANAGEMENT 

"Most  of  man's  misfortunes  are  due  to  man." 
"There  is  nothing  men  will  not  attempt  when  great  enterprises 
hold  out  the  promise  of  great  reward." 

No.     It  was  not  Herbert  Kaufmann  nor  was  it  Harrington 


26  ANALYSIS  OF  THE  PRODUCT 

Emerson  who  first  uttered  the  above  sentences.  They  were 
recorded  by  two  Romans — exponents  of  the  doctrines  of  work 
and  efficiency  of  nearly  two  thousand  years  ago — Livy  and  Pliny. 

Undoubtedly  every  business  man  realizes  that  no  matter  how 
perfect  his  product  may  be,  he  can  not  expect  success  from  his 
advertising  unless  the  brains  and  the  ability  of  a  man — a  fearless 
man — are  given  full  play. 

I  am  not  going  to  attempt  to  describe  the  ideal  advertising 
man.  I  have  a  notion  that  all  he  needs  is  (1)  the  power  of 
analysis,  (2)  common  sense,  (3)  imagination,  and  (4)  the  cour- 
age of  his  convictions.  But  it  is  not  the  purpose  of  these  lectures 
to  champion  any  theories  or  to  enter  into  any  controversies.  We 
are  planning  your  advertising  campaign.  There  are  certain 
fundamental  questions  in  relation  to  the  management  of  your 
organization  which  must  be  asked  and  answered  before  we  can 
determine  whether  or  not  there  is  any  use  in  writing  copy  and 
spending  money  for  your  advertising. 

a.  Does  final  word  in  the  management  of  the  details  of  your 
advertising  depend  upon  one  man  or  a  group  of  men? 

"In  every  organization  there  are  two  kinds  of  positions, 
executive  and  detail,  and  fortunate  indeed  is  the  man  who  works 
under  an  executive  who  has  learned  this  fact."  I  once  heard 
William  H.  Young,  Commissioner  of  Public  Works  of  the  city  of 
Philadelphia,  express  himself  in  the  above  sentence,  and,  while 
it  probably  did  not  occur  to  him  that  he  was  uttering  an  epigram, 
it  struck  me  so  forcefully  that  I  now  recall  it  word  for  word. 

I  once  attempted  to  prepare  advertising  which  had  to  be 
O.K.'d  by  five  different  bosses.  Each  man  took  time  from  his 
own  department  of  the  business  to  make  changes  in  the  copy 
and  to  suggest  a  different  way  to  draw  the  illustrations.  Each 
one  seemed  to  feel  that  the  amount  of  assistance  he  rendered 
the  advertising  department  was  measured  by  the  number  of 
changes  he  made. 

The  other  day  I  was  talking  about  this  subject  with  Mr. 
William  B.  Morris.  I  do  not  know  of  a  man  who  relies  more 
on  competent  counsel  or  who  is  quicker  to  take  advantage  of 
constructive  criticism.  Mr.  Morris  said,  "Advertising  is  the 
product  of  imagination,  of  courage,  and  of  other  subtle,  almost 


SUPPLY  27 

spiritual  forces  which  make  it  nothing  short  of  cruel  to  subject 
it  to  interference  from  those  who  have  not  seen  the  development 
of  the  idea  from  the  moment  of  its  inception.  Yet  I  do  not 
know  of  any  department  of  any  business  which  receives  so  much 
direction  from  other  departments.  Advertisements  are  the  rep- 
resentatives, the  ambassadors  of  the  organizations,  and  they 
should  express  the  policy  and  the  quality  of  that  organization  in 
every  detail.  It  is  right  that  "those  higher  up"  should  give 
counsel  but  they  can  not  in  justice  to  themselves  give  attention 
to  details  unless  they  give  all  of  their  time  to  those  details. 

"The  conscientious  advertising  man  gets  much  valuable  help 
from  all  other  departments.  He  also  gets'  valuable  suggestions 
from  children,  from  books,  and  from  his  recreations." 

"But  if  one  man  is  to  be  responsible  for  the  advertising,  no 
one  by  interference  should  relieve  him  of  that  responsibility." 

b.  Does  the  management  consider  advertising  as  an  investment, 

an  expense,  or  a  gamble? 

\Yhile  it  is  not  the  purpose  of  these  lectures  to  propound  any 
theories,  the  convictions  of  the  management  as  to  what  adver- 
tising really  is  may  seriously  affect  the  life  and  productivity 
of  your  advertising. 

If  the  management  considers  advertising  as  a  gamble,  you 
can  be  pretty  certain  that  the  time  will  come  when  just  one 
more  blue  chip  may  be  necessary  to  "win  the  pot"  that  some  one 
in  your  organization  will  "pass." 

The  advertising  manager  of  one  of  the  largest  manufacturers 
of  a  household  necessity  has  been  »vorking  for  years  to  get  his 
organizations  to  do  national  advertising.  He  has  proven  the 
efficiency  of  a  house  organ  which  now  has  a  circulation  of  nearly 
50,000.  He  has  secured  distribution  and  wonderful  dealer- 
cooperation.  Each  year  for  the  last  four  years  he  has  gone 
before  his  board  of  directors  with  complete  plans  for  a  national 
advertising  campaign.  Each  year  he  has  been  ordered  to  go 
ahead  and  each  year  he  has  been  stopped  in  his  work  almost 
before  it  started. 

I  talked  writh  him  at  the  Baltimore  Convention  of  the  Associ- 
ated Advertising  Clubs  of  America.  He  asked  me  what  I  would 


28  ANALYSIS  OF   THE  PRODUCT 

advise  him  to  do.  He  is  a  fine  fellow  with  a  big  business  brain 
and  even  under  this  handicap  is  recognized  as  one  of  the  best 
advertising  managers  in  America.  "What  shall  I  do?"  he  said, 
almost  with  tears  in  his  eyes.  "I  am  getting  a  good  salary  but 
here  are  people  at  this  convention  offering  one-half  again  as 
much  ?  I  don't  want  to  go  if  there  is  a  chance  at  home.  I've  put 
some  of  the  best  years  of  my  life  into  that  business.  It  is  rec- 
ognized throughout  the  world  as  the  leader  in  its  line.  It  is  rated 
into  the  millions  and  has  plenty  of  capital.  Anyone  who  under- 
stands the  nature  of  the  business  can  see  that  it  is  still  only  in 
its  infancy  and  that  there  is  in  it  one  of  the  greatest  advertising 
opportunities  in  this  country.  It  is  ready  for  bigger  things,  but 
the  directors  won't  march  forward,  and  even  if  they  do  I  have  no 
assurance  that  they  will  keep  on  marching.  They  seem  to  con- 
sider advertising  as  some  kind  of  a  gamble." 

When  you  once  plant  radishes,  you  can't  afford  to  be  pulling 
them  up  all  the  time  to  see  if  the  roots  are  growing. 

There  is  hardly  a  city  in  the  United  States  which  does  not 
have  its  list  of  would-be  advertisers  who,  for  fear  of  being  called 
unprogressive,  would  never  for  a  moment  think  of  letting  a 
new  addition  to  the  factory  go  unroofed,  yet  discontinue  their 
advertising  at  the  slightest  apprehension.  The  roofless  factory 
would  be  noticed  by  the  few  who  pass  it  daily,  while  the  dis- 
continuing of  the  advertising,  by  its  very  nature,  is  noticed  by 
the  millions. 

The  only  thing  that  I  can  think  of  which  is  a  greater  handicap 
to  an  advertising  man  than  having  the  management  consider 
advertising  as  a  gamble  is  to  have  it  considered  as  a  "charitj." 
The  day  of  the  Church  Fair  Program  and  other  such  hold-ups 
is  going  fast.  Yet  "charity  advertising"  together  with  her  big 
brother  "fear-of-the-power-of-the-press  advertising"  are  still  in 
our  midst  and  it  is  hard  for  me  to  hold  my  temper  and  simply 
say  that  it  is  very  discouraging  for  an  advertising  man  who  has 
plenty  of  profitable  channels  in  which  to  invest  money  to  be 
called  into  the  office  of  the  president  and  there  meet  a  s\\eet 
lady  blackmailer  or  a  big  bully  of  what  physiologists  call  a  man, 
and  be  informed,  "I  think  we  had  better  take  a  $100  ad.  in  this 
program.  Will  you  please  prepare  the  copy?" 


SUPPLY  29 

c.  Will  the  personal  conceit  or  tastes  of  the  management  affect 

the  advertising? 

Look  your  subconscious  self  squarely  in  the  eye  and  repeat 
this  question. 

E.  St.  Elmo  Lewis  once  told  me  that  he  hoped  some  day 
to  write  a  book  on  "Advertising  to  the  Man  in  the  Mirror." 

It  has  been  said  that  half  of  the  advertising  of  to-day  is  writ- 
ten with  one  eye  on  what  the  advertiser's  personal  friends  will 
say  and  the  other  eye  on  what  his  competitors  will  say.  Is  it  any 
wonder  then  that  so  much  of  it  looks  cross-eyed? 

I  once  worked  for  a  man  who  did  not  seem  to  care  what  we 
did  with  his  money,  just  so  we  put  a  painted  sign  in  a  position 
to  be  seen  best  from  the  windows  of  his  favorite  club.  And  what 
do  you  think  his  product  was  ?  Farmers'  work  shoes ! 

Oh,  the  times  without  number  that  my  artists  have  had  to 
•  make  expensive  drawings  over  again  because  some  customer  pre- 
ferred brunettes  to  blondes,  or  blue  eyes  or  brown! 

A  salesman  for  a  large  lithograph  house,  which  sells  to  ad- 
vertisers, tells  me  that  he  never  sends  an  order  to  his  house  for 
a  sketch  without  accompanying  it  with  a  little  chart  of  the  buyer 
and  his  apparent  personal  tastes.  From  his  tie  and  hose  are 
determined  the  shade  and  degree  of  his  favorite  color.  If  his 
stenographer  is  pretty,  shows  interest  in  her  employer,  and  is 
a  blonde,  the  report  is  that  he  likes  blondes.  If  she  is  not  pretty 
and  is  a  blonde,  a  chance  is  taken  on  brunettes.  Everything 
about  the  customer's  office  that  must  at  one  time  or  another 
have  pleased  his  fantasy  is  noted  in  the  report  and  when  the 
sketch  is  completed  it  is  loaded  down  with  his  favorite  color,  his 
favorite  girl,  and  any  other  favorite  that  can  be  discovered. 

All  this  may  be  very  interesting  and  a  very  clever  way  to 
sell  lithography,  but  it  is  not  a  very  sure  way  to  prepare  adver- 
tising which  will  appeal  to  the  ultimate  consumer. 

Do  not  understand  me  to  say  that  one  should  not  let  all  of 
the  taste  that  is  in  him  be  reflected  in  his  advertising.  There  is 
a  vast  difference  between  taste  and  personal  tastes. 

Neither  will  I  enter  into  a  discussion  of  the  advantages  and 
disadvantages  of  the  use  of  the  personal  pronoun,  the  picture 
of  the  founder  of  the  business,  or  the  exaggerated  drawing  of 
''our  enormous  plant''  in  advertising. 


30  ANALYSIS   OF   THE  PRODUCT 

Simply  .ask  yourself  how  much  of  all  this  is  personal  conceit 
and  how  much  is  advertising. 

There  are  occasions  when  the  signature  or  even  the  photo- 
graph of  the  one  who  takes  the  responsibility  for  a  business  is 
necessary  in  an  advertisement.  A  man  should  not  be  ashamed  to 
have  his  own  name  connected  with  the  source  of  his  bread  and 
butter.  People  like  to  feel  that  they  are  dealing  with  a  human 
being,  not  a  great  machine. 

Public  service  corporations  are  beginning  to  learn  this  prin- 
ciple. The  founder  of  a  great  public  service  corporation  who 
was  known  to  all  his  fellow  citizens  as  "Tom"  died  several  yea-s 
ago.  For  about  three  years  all  the  news  in  regard  to  that  cor- 
poration emanated  from  "the  company."  The  name  of  the  new 
president  was  not  mentioned.  It  was  only  a  short  time  before  the 
claim  department  noticed  a  surprising  increase  in  personal  injury 
cases  and  "kicks"  of  all  kinds.  Now  all  publicity  goes  out  over 
the  signature  of  the  new  president  or  as  emanating  from  him 
and  complaints  are  said  to  have  greatly  decreased. 

To  refuse  to  allow  one's  name  to  be  used  in  one's  advertising 
when  it  is  necessary,  is  as  much  an  evidence  of  personal  conceit 
as  it  is  to  flaunt  it  in  the  face  of  the  world  on  the  slightest 
possible  provocation. 

d.  Is  the  sales  force  ^vell  organized? 

This  is  a  vital  question  to  consider  before  advertising.  A 
manufacturer  recently  spent  $5,000  in  one  month  in  a  carefully 
planned  local  advertising  campaign.  When  the  campaign  was 
being  planned,  the  advertising  agent  on  asking  this  question  was 
told  that  the  manufacturer  had  six  well-trained  city  salesmen 
familiar  with  the  trade  and  constantly  at  work.  This  number 
seemed  sufficient  and  the  agent  proceeded  with  the  advertising. 
The  advertising  manager  reported  that  he  had  carefully  outlined 
the  campaign  to  the  salesmen  and  each  understood  his  part. 

Before  the  campaign  had  lasted  a  week  the  agent  became 
alarmed  at  the  meager  results  secured  by  the  salesmen.  On  in- 
vestigation he  found  that  the  sales  force  of  six  had  dwindled  to 
two,  that  all  of  the  salesmen  were  working  on  a  flat  commission 
basis  and,  instead  of  being  well-drilled  efficient  men,  were  what 
might  be  called  transient  salesmen.  The  public  was  being  famil- 


SL'PPLY  31 

iarized  with  the  product  but  no  one  was  selling  the  dealers.  Two 
letters  had  been  sent  to  dealers  but  no  response  had  been  re- 
ceived. AYhat  was  to  be  done?  Money  was  being  spent  at  the 
rate  of  $200  a  day  to  raise  the  plums  yet  there  was  no  force  to 
pick  them.  There  were  nearly  2,000  dealers  to  see  in  three  weeks 
although  the  agent  had  been  led  to  believe  that  they  had  all  been 
seen  before  the  campaign  commenced.  In  desperation  the  agent, 
stepping  in  and  assuming  charge,  put  a  corp  of  girls  on  the  tele- 
phones and  instructed  them  to  call  up  the  2,000  dealers.  This  was. 
of  course,  a  desperate  and  probably  unheard-of  way  of  attempt- 
ing to  obtain  distribution,  but  as  there  was  no- time  then  to  train 
new  salesmen,  as  the  girls'  voices  were  more  pleasant  and  less 
expensive  than  the  men's,  and  as  they  could  be  trained  for  tele- 
phone solicitations  in  short  order,  it  seemed  the  only  way  to  save 
partially  a  great  loss.  The  results  were  better  than  was  thought 
possible.  The  advertising  had  been  so  effective  that  a  mere  men- 
tion of  the  proposition  to  the  dealers  secured  more  than  a  twenty 
per  cent  response.  If  this  could  be  done  by  girls  over  the  tele- 
phone, is  it  not  reasonable  to  suppose  that  three  or  four  times  the 
number  of  orders  would  have  been  secured  by  a  sufficiently  large 
and  well-trained  force  of  salesmen? 

e.  Will  the  management  of  the  sales  and  manufacturing  depart- 
ments cooperate  with,  or  dictate  to.   the  advertising  depart- 
ment? 

Although  reams  have  been  written  on  this  subject  and  it  has 
often  been  the  subject  of  debate  I  think  all  will  agree  that  the 
sales  and  advertising  departments  should  be  married.  The 
happily  married  couple  wastes  very  little  time  arguing  the  ques- 
tion "who  is  boss.''  Bear  in  mind,  however,  that  just  because 
they  live  under  the  same  roof  is  no  sure  indication  that  they  are 
married. 

If  such  a  condition  does  not  exist  in  your  organization  I 
would  suggest  that  you  stop  right  now  and  "have  it  out"  before 
you  go  any  further  in  planning  this  advertising  campaign. 

f.  Can  the  management  be  duplicated  or  is  it  dependent  upon  the 

knowledge  and  ability  of  one  individual? 

The  day  of  the  one-man  business  is  passed.     The  greatest 


32  ANALYSIS  OF  THE  PRODUCT 

fruits  of  your  advertising  may  become  ripe  the  day  or  the  year 
that  the  one  who  "keeps  it  all  in  his  head"  has  left. 

I  know  a  young  man  who  holds  in  his  head  the  secret  of 
combining  metals  in  a  certain  way  to  produce  a  certain  result. 
A  great  business  rests  on  this  formula  and  that  man's  memory 
and  skill.  That  business  carries  insurance  on  this  man's  life. 
If  it  should  attempt  to  advertise,  it  should  carry  additional  insur- 
ance to  the  extent  of  the  value  of  all  of  its  advertising  contracts, 
for  the  supply  will  stop  the  week  that  that  formula  is  lost. 

There  is  a  business  now  being  financed  by  a  man  eighty- 
three  years  old  and  his  wife  who  is  sixty- four.  This  business 
is  also  built  on  a  formula  but  the  formula  is  deposited  in  a  trust 
company  for  the  stockholders.  Nevertheless  this  couple  was 
unable  to  sell  any  of  its  stock  until  they  had  taken  in  with  them  a 
young  man  and  started  to  build  up  an  organization. 

5.     CAPITAL 

The  element  of  capital  comes  last  in  the  sources  of  supply  but 
it  is  usually  the  first  to  be  considered.  In  another  chapter  we  will 
discuss  this  element  again  when  we  consider  the  amount  of  money 
you  can  afford  to  spend  for  your  advertising.  There  are  two 
questions  which  must  be  asked  here,  however. 

a.  What  per  cent  of  increase  in  the  present  demand  zvill  the  capital 

accommodate? 

You  can  not  afford  to  get  under  way  with  your  advertising  and 
suddenly  discover  that  you  would  have  to  lose  control  of  your 
company  in  order  to  raise  sufficient  capital  with  which  to  produce 
enough  of  your  product  to  supply  the  demand.  This  has  often 
happened  and  many  advertising  attempts  which  have  become 
known  as  failures  have  been  cases  where  concerns  have  been  com- 
pelled to  stop  "to  catch  up  with  their  advertising." 

b.  How  much  of  an  investment  in  "good  will"  will  the  present 

capital  accommodate? 

In  other  words  how  much  can  you  afford  to  invest  in  adver- 
tising before  it  brings  returns?  We  will  not  discuss  here  the 
amount  it  will  be  advisable  or  profitable  to  spend  (see  Part  V). 


SUPPLY  33 

The  question  is  "how  much  could  you  spend  if  you  should  have 
to?"  Usually  a  man's  nerve  gives  out  before  his  pocketbook. 
William  Wrigley  is  one  striking  exception.  It  is  said  that  he  lit- 
erally poured  one  fortune  after  another  into  advertising  until  he 
obtained  his  present  wonderful  success. 

Advertising  requires  three  things:  time,  money  and  intelli- 
gence. In  the  beginning  advertising  seldom  pays.  As  the  farmer 
plants  his  seed  and  waits,  knowing  full  well  that  if  the  seed  is 
right  and  the  soil  is  right  the  harvest  will  come,  so  the  advertiser 
invests  his  money  and  waits,  knowing  full  well  that  if  his  adver- 
tisements are  intelligently  prepared  and  if  he  has  chosen  his 
market  carefully  time  will  bring  the  harvest. 

When  the  Russell-Miller  Milling  Company  began  to  advertise 
Occident  Flour  the  officers  knew,  as  every  right-thinking  business 
man  knows,  if  he  only  has  the  nerve  to  admit  it,  that  successful 
advertising  does  two  things : 

First,  it  increases  the  asset  of  ''good  will"  in  a  business. 

Second,  by  increasing  the  volume  it  ultimately  decreases  the 
proportionate  selling  cost. 

As  neither  the  increase  in  good  will  nor  the  decrease  in  pro- 
portionate selling  cost  comes  in  a  minute  or  a  month,  the 
advertising  expense  was  neither  immediately  listed  as  an  asset  nor 
charged  to  selling  expense. 

The  first  appropriation  was  for  -$600,000,  one  third  of  this  to 
be  spent  annually  for  three  consecutive  years. 

"Our  expenditure  for  advertising,"  H.  S.  Helm,  the  general 
manager,  told  me  the  other  day,  "was  undertaken  with  no 
thought  or  expectation  of  an  early  harvest  on  the  seed  sown. 
It  was  considered  at  the  start  that  material  returns  should  not 
be  conservatively  looked  for  short  of  three  years'  continuous 
advertising. 

"The  undertaking  was  looked  upon  and  treated  as  an  invest- 
ment in  good  will  and  insurance  on  business  already  established. 
It  was  perfectly  plain  that  the  current  business,  or  that  of  the 
very  near  future,  could  not  stand  an  increase  in  per  barrel  selling 
cost  to  absorb  the  advertising  expense.  We  therefore  made  our 
appropriation  covering  a  period  of  three  years  and  prepared  to 
charge  the  advertising  out  as  expended  from  past  earnings  and 


34  ANALYSIS   OF   THE  PRODUCT 

surplus  until  such  time  as  it  could  be  charged  to  the  current  selling 
cost  without  increasing  the  per  barrel  selling  cost." 

Six  hundred  thousand  dollars,  on  an  intangible  and  new 
venture,  taken  right  out  of  past  profits,  requires  some  nerve,  as 
every  advertising  man  knows ;  but  the  results  have  already 
proved  the  soundness  of  the  theory ;  for  I  am  told  that  the  propor- 
tionate selling  cost  has  so  far  decreased  that  instead  of  waiting 
until  three  years  were  out,  after  the  end  of  the  second  year  the 
advertising  expense  was  charged  in  as  part  of  the  current  selling 
expense.  And  still  the  investment  in  "good  will"  because  it  is 
real  good  will,  goes  on  drawing  compound  interest. 

Since  the  national  advertising  commenced,  the  consumption 
of  Occident  Flour  has  increased  over  five  times  as  fast  as  the 
actual  selling  cost. 


C.     QUALITY. 

Xow  we  are  coming  to  the  selling  points  which  you  will  wish 
to  use  in  your  advertising. 

The  advertising  man  is  vitally  interested  in  the  quality  of  an 
article  to  the  extent  that  it  gives  him  his  strongest  arguments 
and  assists  in  assuring  permanent  results  to  his  advertising. 

It  has  been  said  that  America  is  price  mad  and  that  the  greatest 
effort  of  modern  manufacture  is  to  cut  prices  by  cheapening 
quality. 

For  convenience  we  have  divided  this  subject  into  three 
classes:  (1)  the  quality  of  the  article  itself,  (2)  the  quality  of 
the  name  by  which  your  article  will  be  known,  (3)  the  quality  of 
the  container  or  package. 

1.     THE  SUBSTANCE  ITSELF 

a.  Can   it   be  improved   upon    in   quality  of  materials  or  work- 
manship/ 

This  question  is  one  for  the  manufacturing  department.  It  is, 
however,  a  great  advantage  to  an  advertising  man  to  know  in 
his  secret  heart  that  the  product  he  is  to  champion  before  all 
the  world  can  not  be  improved  upon  in  quality  of  materials  or 
workmanship.  He  need  then  fear  no  competition.  It  is  not 
enough  for  him  to  feel  that  it  is  the  best  in  the  market.  If  that 
is  the  case  the  day  may  come  when  some  competitor  with  a 
deeper  belief  in  quality  will  enter  his  field. 

That  the  American  people  are  not  all  price  mad  and  that 
quality  will  be  recognized  if  people  are  only  told  through  forceful 
advertising  where  to  look  for  it,  is  evidenced  by  the  following 
story  from  an  earlier  chapter  in  the  history  of  the  great  success 
of  the  makers  of  Occident  Flour. 

There  never  has  been  a  more  vivid  illustration  of  fierce  com- 
petition than  that  furnished  by  the  condition  wrhich  existed  in 
the  flour  business  at  the  beginning  of  the  twentieth  century. 
Ten  thousand  millers  were  crying  each  with  a  loud  voice  that 
their  product  was  "the  best,  the  best,  the  best."  And  yet  each 
was  competing  on  the  same  basis  with  all  the  others ;  cutting 
prices  by  lowering  quality.  In  this  condition  the  larger  mills, 


36  ANALYSIS  OF  THE  PRODUCT 

being  able  to  buy  wheat  in  the  world's  market,  had  preeminently 
the  advantage,  while  the  smaller  mills,  located  in  the  small  towns 
and  forced  to  grind  the  high-grade  local  wheat,  found  hardly 
enough  profit  in  the  business  to  make  a  decent  living. 

One  of  these  small  town  milling  companies  was  the  Russell- 
Miller  Milling  Company,  of  North  Dakota.  In  the  spring  of  1902 
this  company  owned  one  little  mill  of  only  225  barrels  daily  ca- 
pacity located  at  Valley  City. 

In  the  spring  of  1905  the  Russell-Miller  Milling  Company 
opened  an  office  in  Minneapolis.  It  was  not  an  unusual  thing  in 
those  days  for  a  small  town  mill,  thoroughly  convinced  of  the 
superiority  of  its  product  and  with  a  faith  in  the  discretion  of  the 
public,  to  establish  a  Minneapolis  office  and  begin  to  raise  its  little 
voice  and  cry  "best,  best,  best"  with  the  rest. 

The  result  was  usually  the  same.  It  was  not  long  before  the 
impudent  little  aspirant  was  caught  in  the  "maelstrom  of  compe- 
tition," and  all  its  breath  was  used  up  in  hard  swimming. 

Everybody  predicted  the  same  thing  for  these  idealistic  boys 
from  North  Dakota. 

I  recall  a  remark  which  a  friend  of  mine,  familiar  with  the 
grain  and  milling  business,  made  at  the  time:  "Oh,  they  won't 
last  long.  They'll  make  a  little  noise  and  spend  a  lot  of  good 
money  for  advertising,  but  as  soon  as  the  big  boys  find  these 
fellows  the  least  bit  bothersome  they  will  cut  prices,  below  cost 
if  necessary,  and  drown  them." 

Did  they  wish  to  advertise?    Yes,  they  did. 

On  the  same  day  advertisements  appeared  in  the  Minneapolis 
street  cars,  on  the  billboards,  in  the  newspapers,  and  in  grocers' 
windows.  Instead  of  the  old  phrases — "best  on  earth"  and  the 
like — there  appeared  the  bold  declaration,  "Occident  Flour — 
costs  more — worth  it." 

I  do  not  know  whether  the  feeling  of  pity  in  the  minds  of 
the  grain  men  was  increased  or  diminished  by  this  declaration, 
but  I  do  know  that  the  price-cutting  party  which  was  scheduled 
for  this  town  failed  to  come  off.  Simple  as  it  was,  the  fact 
that  quality  is  more  important  than  price  seemed  to  be  a  new 
idea  in  the  milling  business. 

Straightforward  advertising  with  quality  behind  it  has  often 
cut  the  Gordian  knot  of  price.  The  greatest  danger,  however, 


QUALITY  37 

from  which  the  good  name  of  advertising  has  suffered  is  in  cases 
where  advertisers  attempt  to  raise  the  price  of  their  goods  so 
that  it  will  immediately  pay  for  the  advertising. 

b.  Can  your  article  advisedly  be  made  more  attractive  to  the  ulti- 
mate consumer  through  sight,  touch,  taste,  hearing,  or  smell? 

A  customer  will  conceive  your  article  through  the  senses.  The 
more  attractive  the  article  to  any  of  the  senses  the  easier  will  be 
your  sale. 

In  some  articles  such  as  foods,  toilet  articles,  and  others,  which 
have  an  intimate  relation  to  the  body,  the  addition  of  a  sense  will 
often  greatly  assist  the  sale. 

There  is  a  certain  substance  used  as  a  toilet  article  which  has 
the  property  of  softening  hard  water  for  the  bath.  The  raw  ma- 
terial from  which  this  is  made  is  not  attractive  to  sight,  but  the 
manufacturer,  through  his  chemist,  has  found  a  way  to  put  it  up 
in  white  crystals  which  are  attractive  to  both  sight  and  touch. 
The  raw  material  is  odorless  but  the  finished  product  is  attract- 
ively perfumed.  The  reaction  of  the  crystals  in  the  water  is  not 
visible  to  the  naked  eye,  but  the  chemist  has  succeeded  in  making 
these  perfumed  crystals  effervesce  when  they  strike  the  water,  so 
that  Her  Ladyship  as  she  prepares  for  her  luxuriant  bath  can 
apparently  both  see,  smell,  and  hear  the  bath  powder  do  its  'inter- 
esting work. 

When  I  left  college  I  first  attempted  to  sell  advertising  spe- 
cialties to  the  hard-headed  small  town  merchants  of  Illinois. 
There  was  one  article  in  my  line  of  calendars  which  did  not  sell. 
It  was  a  hideous  looking  thing,  a  picture  of  an  ugly  vase  filled 
with  red  roses.  I  hated  the  sight  of  it,  but  it  was  up  to  me  to 
make  that  piece  sell.  One  day  I  sprinkled  a  little  rose  perfume  on 
the  back  of  the  pad  on  which  the  picture  was  mounted.  It 'was  a 
trick,  of  course,  but  I  was  surprised  to  find  how  rapidly  that 
calendar  design  sold  after  that.  Few  seemed  to  detect  the  odor ; 
yet  even  to  me  those  roses  seemed  to  stand  out  more  vividly  in 
that  picture  than  they  did  before  the  sense  of  smell  assisted  the 
sense  of  sight. 

In  the  case  of  a  new  product  the  matter  of  attractive  designing 
deserves  careful  consideration.  You  will  probably  wish  often  to 
show  a  picture  of  your  product  in  your  advertising.  If  it  is  so 


38  ANALYSIS  OF  THE  PRODUCT 

designed  as  to  make  you  ashamed  of  it,  you  may  rest  assured  that 
your  customers. will  be  ashamed  of  you  and  they  may  completely 
refuse  to  buy. 

A  few  years  ago  the  British  Government  appointed  a  commis- 
sion to  investigate  German  merchandise,  its  manufacture  and  its 
distribution,  to  determine  if  possible  why  this  merchandise  was 
making  such  headway  in  England  against  articles  manufactured 
in  that  country.  After  a  most  exhaustive  investigation  the  com- 
mission reported  that  neither  the  materials  nor  the  workmanship 
of  the  Germans  was  superior  to  the  British,  nor  were  the  Ger- 
mans able  to  sell  at  a  lower  price;  but  that  the  quality  of  the 
designs  for  that  merchandise  and  its  packages  were  so  superior 
that  the  articles  themselves  were  so  much  more  attractive  to  the 
British  themselves  that  the  German  articles  seemed  to  be  worth 
more  than  those  of  their  own  manufacturer. 

I  have  often  had  a  desire  to  design  a  really  attractive  coal 
stove.  Can  you  imagine  one  thing  of  American  manufacture  more 
hideous  (with  its  heavy,  gaudy  over-ornamentation)  than  the 
coal  stove? 

But  in  this  analysis  we  must  remember  that  the  question  is 
"can  the  article  advisedly  be  made  more  attractive  to  the  ultimate 
consumer? 

Everyone  is  said  to  have  a  fundamental  appreciation  of  art. 
Most  people  would  recognize  a  good-looking  stove  from  a  hideous 
stove.  There  are,  however,  associations  and  sentiments  connected 
with  the  stove,  the  central  thing  of  interest  in  the  home,  which 
might  make  it  very  dangerous  to  change  its  appearance.  Senti- 
ment is  a  deeper  emotion  than  the  appreciation  of  art.  There  are 
incidents  of  the  changing  of  the  designs  of  staple  and  long-estab- 
lished commodities  which  have  not  been  successful. 

On  the  other  hand,  if  I  were  designing  an  incinerator, 
which  happened  to  be  my  privilege  a  few  months  ago  (the  owners 
of  this  invention  did  not  go  to  an  engineer  nor  yet  to  an  artist, 
but  to  an  advertising  man  because  they  wanted  selling  points  built 
into  the  very  appearance  of  their  product),  I  would  not  attempt 
to  design  an  incinerator  like  a  stove  just  because  it  is  made  to 
burn  things. 


QUALITY  39 

c.  Can  it  be  made  more  convenient  for  any  of  its  uses,  in  sub- 
stance, in  size,  or  in  shape? 

Follow  your  article  through  all  of  the  stages  of  its  use  and 
see  if  it  always  seems  to  fit.  It  might  be  easier  for  the  grocer  to 
change  the  width  of  his  shelves  to  accommodate  your  product  but 
the  chances  are  he  will  not  do  it  and  if  after  a  time  he  can  find  no 
place  for  it  he  may  not  order  any  more. 

If  you  sell  soap,  get  into  the  tub  and  play  with  it  for  a  while. 
One  of  the  greatest  selling  points  for  Ivory  soap  has  been  "It 
floats."  The  little  fairy  prefers  "the  oval  cake  that  fits  your 
hand."  These  are  all  selling  points  well  worth  considering. 

•Xo  one  knows  how  much  George  P.  Rowell,  the  pioneer  ad- 
vertising agent,  added  to  the  consumption  of  Ripans  when  in 
1891  he  introduced  the  tablet  (or  as  he  trade-marked  it  "tabule") 
form.  Before  that  day  a  person  had  to  wait  until  arriving  home 
before  taking  his  medicine,  or  was  forced  to  carry  a  bottle  around 
with  him. 

I  understand  that  lately  many  have  almost  entirely  discon- 
tinued the  use  of  Sapolio  because  they  find  scouring  powders 
more  convenient  than  the  cake  which  crumbles  so  readily  in  wa- 
ter. Sapolio  is  supposed  to  be  used  dry,  but  domestics  are  said 
always  to  leave  it  in  the  water.  It  would  seem  that  there  is 
room  for  argument  on  this  point.  But  what  is  the  use  of  arguing  ? 
\Yhy  can  not  one  more  be  added  to  the  Sapolio  family? 

2.     THE  NAME 

It  has  been  said  that  the  Royal  Baking  Powder  Company  has 
been  offered  $5,000,000 — a  million  dollars  a  letter — for  the  right 
to  use  the  name  Royal  in  connection  with  baking  powder. 

The  modern  answer  to  Shakespeare's  immortal  question, 
'"What's  in  a  name?"  would  probably  be  "years  of  persistent 
advertising  and  the  reputation  for  square  dealing  which  is  behind 
that  advertising."  There  are  other  products  branded  Royal. 
There  is  hardly  a  staple  which  has  not  one  such  brand.  Every 
one  of  these  is  not  worth  $5,000,000.  Nevertheless,  the  advantage 
of  a  short,  distinctive,  easy-to-remember  and  easy-to-be-pro- 
nounced name  for  a  product  is  recognized  by  all  advertisers. 

\Yhile  the  reputation  of  a  concern  which  continually  changes 
its  name  or  the  name  of  its  product  is  often  considered  as  doubt- 


40  ANALYSIS  OF   THE  PRODUCT 

ful  as  that  of  the  progressive  grass  widow,  there  are  often  times 
when  the  change  of  name  is  quite  necessary  and  is  in  fact  a  dis- 
tinct advantage. 

When  Hugh  Chalmers  bought  the  Detroit  factory  of  the 
Thomas  Motor  Car  Company  he  wished  to  show  that  a  change 
had  been  made  in  the  management  and  at  the  same  time  to  take 
advantage  of  the  reputation  whkh  had  been  obtained  for  the 
Thomas  name.  The  old  name  was  the  "Thomas-Detroit."  The 
next  year  the  product  became  known  as  the  "Chalmers-Detroit." 
The  following  year  the  product  established  itself  as  the  "Chal- 


a.  Must   the  consumer  call  for  your  product   by   one   or  more 
names? 

A  few  years  ago,  before  manufacturers  gave  much  thought  to 
the  subject,  it  was  quite  customary,  when  a  new  product  was 
put  on  the  market,  to  choose  a  name  which  had  no  relation  to 
other  names  in  the  same  line. 

As  years  went  by  each  had  built  up  a  clientele  on  its  own 
merits  which  might  be  completely  lost  if  the  names  were  changed. 

It  has  been  the  task  of  modern  advertising  to  unravel  some  of 
these  snarled  threads  before  it  can  weave  its  own  fabric  and  in 
many  cases  this  has  been  done  without  cutting  a  single  strand. 
Men  who  have  accomplished  these  tasks  have  become  known  as 
giants  in  the  twentieth  century  advertising  field. 

Sometimes  these  men  have  confronted  literally  hundreds  of 
jobbbers'  or  dealers'  brands  as  did  George  Coleman  when  he 
began  to  popularize  the  general  name  "McElwin  Shoe." 

Others  have  found  the  multiplicity  to  come  from  a  combina- 
tion of  factories  such  as  the  conditions  met  with  by  O.  C.  Harn 
in  the  National  Lead  Company,  and  Hubbs  in  the  United  States 
Tire  Company. 

It  often  takes  years  to  untangle  such  snarls.  Patience  and 
educational  advertising  must  be  employed  to  the  last  degree. 

Mr.  Harn  solved  his  problem  by  establishing  the  moving  char- 
acter trade-mark  of  the  now  famous  Dutch  Boy  painter.  He  used 
this  new  character  with  the  old  trade-marks  until  all  became  ac- 
customed to  this  association.  In  national  advertising  he  used  all 
of  the  32  brands  with  the  boy  at  one  time  and  for  local  advertis- 


QUALITY  41 

ing  he  used  the  one  or  more  brands  which  had  been  established 
in  that  territory.  Old  customers  still  called  for  the  old  familiar 
brands,  and  got  them,  but  were  given  to  understand  that  the  old 
brand  was  also  a  Dutch  Boy  National  brand. 

As  the  personality  of  the  Dutch  Boy  was  stronger  and  more 
easily  remembered  than  some  of  the  other  names  old  customers  in 
time  began  to  call  for  the  Dutch  Boy  National  Paint.  The  change 
was  made  by  the  customers  themselves  and  apparently  at  their 
own  will  and  in  no  way  interrupting  the  pulling  power  of  the  old 
brand  names. 

The  problem  of  the  United  States  Tire  Company  was  the  most 
difficult  with  the  jobbers  for  whom  well-recognized  brands  had 
been  established  and  to  which  they  clung  like  grim  death.  To 
their  surprise  Mr.  Hubbs  did  not  even  intimate  that  they  discon- 
tinue their  old  brand  names  but  showed  them  the  advantage  to 
themselves  in  putting  in  all  of  their  local  advertising  "these  tires 
are  made  for  us  by  the  United  States  Tire  Company,"  so  that  they 
might  take  advantage  of  the  national  advertising  for  the  United 
States  Tire.  Most  of  the  jobbers  saw  the  wisdom  of  this  sugges- 
tion and  thus  the  one  name  began  to  be  established. 

b.  Can  the  name  be  protected  as  a  trade-mark? 

•  Some  advertisers  seem  to  find  a  name  for  their  product  which 
is  so  distinctive  that  they  prefer  to  risk  the  chance  of  not  being 
able  to  protect  it  as  a  trade-mark.  The  name  ''HoleprooP  is 
such  a  one — an  excellent  name  from  all  standpoints  save  one :  it 
is  held  to  be  descriptive  and  can  not  be  protected.  If  the  name 
of  your  product  can  not  be  protected,  you  may  find  yourself  in 
hot  water  most  of  the  time. 

Xames  which  are  held  by  the  courts  to  be  unprotectable  are 
those  which  contain : 

1.  Any  arrangement  of  words  or  devices  descriptive  of  the 

goods  with  which  they  are  used  or  of  the  character  or 
quality  of  the  goods. 

2.  Any  misreputation  of  the  quality,  composition,  character, 

or  origin  of  the  product. 

3.  Anything  which  resembles  a  name  or  a  mark  previously 

used  for  the  same  class  of  merchandise. 

4.  A  geographical  name  or  term,  except  as  used 


42  ANALYSIS  OF  THE  PRODUCT 

a.  In  a  fanciful  way  deceptive  to  no  one  (such  as  "Vienna'' 

for  bread). 

b.  For  so  long  a  time  in  connection  with  a  certain  product, 

commodity,  or  concern  as  to  have  a  secondary  mean- 
ing (such  as  "Waltham"  and  "Elgin''  for  watches 
and  "Kalamazoo"  for  stoves). 

c.  In  connection  with  the  name  of  the  manufacturer  doing 

business  in  that  place  (such  as  "Stoddard-Dayton"). 

5.  The  insignia,  coat  of  arms,  or  flag  of  the  United  States,  a 

sovereign  state,  a  city,  a  foreign  country,  a   fraternal 
society,  or  the  American  National  Red  Cross   Society. 

6.  Merely  the  name  of  an  individual,  firm,  corporation,  or 

association  unless  it  is  in  some  distinctive  design  such 
as  a  signature  or  is  accompanied  by  a  portrait. 

7.  Anything  against  public  policy,  decency,  or  morals. 

8.  A  portrait  of  a  living  individual  unless  by  that  person's 

consent,  or,  if  a  minor,  by  consent  of  his  or  her  legal 
guardian. 

c.  Is  it  distinctive? 

There  are  over  10,000  registered  names  for  brands  of  flour 
alone.  All  of  the  common  names  have  been  preempted  long  ago. 
There  are  said  to  be  nearly  200  Star  brands  of  one  kind  or  another 
in  the  market  to-day.  There  are  over  180  Standards,  over  50 
O.K.'s  and  44  Twentieth  Centuries.  From  the  standpoint  of 
registration  as  well  as  the  standpoint  of  distinction  it  is  often 
better  to  choose  a  proper  name,  a  fanciful  name,  or  a  name  having 
its  derivatives  in  another  language,  such  as  Kodak,  Phonograph, 
Cresco,  and  Crex.  Uneeda  is  in  a  class  by  itself  and  any  combina- 
tion of  letters  to  make  words,  even  if  it  can  be  registered,  seems 
to  be  considered  by  the  general  public  as  an  attempt  at  imitation. 
I  am  told  that  in  the  South  when  the  negroes  wish  to  purchase 
Takoma  biscuits  they  say,  "Gimme  dat  Uneeda  biscuit  in  d'  red 
package." 

A  fanciful  or  new  name  on  the  other  hand  strikes  the  public 
so  unfamiliarly  as  to  require  a  distinct  effort  to  remember  and 
pronounce.  Some  of  the  best  names  are  those  which  through 
other  associations  have  become  familiar  and  and  not  exactly  de- 
scriptive but  may  at  least  be  called  relevant. 


QUALITY  43 

d.  Does  it  relate  to  the  product,  its  uses,  or  associations  in  sound 

or  in  meaning? 

Some  names  in  this  class  are :  "Sunshine"  (for  biscuits  "made 
in  sunshine  factories"),  "Gold  Dust"  (of  a  golden  colored  wash- 
ing powder),  "Ivory"  (for  soap  of  that  color),  "White  Vulcan" 
(for  white  enameled  incinerators),  and  "Cream  of  Wheat"  (the 
well-known  creamy  looking  cereal).  This  subject  of  relevancy 
will  be  taken  up  in  other  chapters  and  it  will  be  shown  how  some 
advertisers  have  used  the  power  of  suggestion  to  paint  pictures 
of  their  products  in  our  minds  not  only  with  words  but  with  colors 
and  even  with  the  style  of  the  type  used. 

e.  Is  it  easy  or  hard  to  pronounce? 

Mr.  Edwards  S.  Rogers,  lecturer  on  the  Law  of  Trade-Marks 
at  the  University  of  Michigan,  tells  a  story  of  a  housewife  who, 
when  asked  in  court  how  she  usually  called  for  a  certain  article, 
replied,  "If  I  see  it,  I  point  to  it;  but  if  I  don't  see  it,  even  if  I 
have  taken  a  special  trip  to  purchase  it,  I  don't  ask  for  it.  I  never 
heard  how  to  pronounce  it  and  I  don't  want  anyone  to  think  I'm 
a  fool."  To  its  manufacturer  the  name  of  this  product  probably 
sounds  very  easy  to  pronounce. 

From  this  it  would  seem  that  an  advertiser  has  no  right  to 
expect  a  person  to  inquire  the  correct  pronunciation  of  the  name 
of  his  product.  Xo  one  will  ever  know  how  much  business  some 
concerns  lose  because  the  names  of  their  products  are  not  easy 
to  pronounce. 

f.  Is  it  short  or  long? 

How  much  easier  it  is  to  say  Tiffany's  than  Hart  Schaffner 
and  Marx.  An  example  of  the  shortening  of  a  firm  name  is  the 
now  famous  B.V.D.  The  new  custom  when  the  firm  has  but  one 
product  seems  to  be  to  have  the  name  of  the  firm  the  same  as  the 
name  of  the  product.  It  is  asking  the  public  a  good  deal  more  to 
remember  "Munsingwear"  made  by  the  Northwestern  Knitting 
Company,  than  it  is  to  remember  Cream  of  Wheat  made  by  the 
Cream  of  Wheat  Company. 

3.     THE  CONTAINER,  COVER,  OR  PACKAGE. 
The  questions  we  have  asked  with  regard  to  the  quality  of  the 


44  ANALYSIS  OF  THE  PRODUCT 

substance  will  also  apply  in  most  cases  to  the  container  or  pack- 
age. With  some  articles  such  as  foods,  drugs,  and  toilet  prepara- 
tions the  package  in  the  mind  of  the  consumer  takes  on  the  nature 
of  the  article  itself.  The  public  often  forms  its  likes  and  dislikes 
for  a  package  absolutely  regardless  of  the  substance  itself. 

One  of  the  most  interesting  advertising  wars  of  modern  times 
is  that  which  is  being  waged  between  Colgate  and  Williams  on 
shaving  soaps.  It  would  take  an  expert  to  distinguish  the  differ- 
ence in  quality  (if  there  is  any)  between  the  substances  them- 
selves. The  contest  rests  entirely  upon  the  attractiveness  and 
the  convenience  of  the  packages.  One  gets  out  a  new  and  more 
convenient  package  and  the  public  swings  that  way.  Then  the 
other  comes  into  the  field  with  "we  couldn't  improve  the  soap  so 
we  improved  the  package"  and  the  trade  swings  back  again. 

a.     Is  it  distinctive? 

So  many  packages  look  as  though  they  came  out  of  the  same 
mill — good  packages,  nice  looking  and  all  that,  but  nothing  about 
them  which  can  be  remembered  over  night. 

The  effect  your  package  will  have  on  the  grocers',  the  drug- 
gists', or  the  shoe-dealers'  shelves  can  not  be  determined  by  ex- 
amining a  single  design  on  your  own  desk.  It  is  surprising  how 
many  optical  illusions  may  occur  in  making  patterns  as  it  were  of 
cartons.  If  you  do  not  take  advantage  of  these  optical  illusions 
they  may  take  advantage  of  you.  Printers'  Ink  tells  of  the  experi- 
ence of  Mrs.  Charles  B.  Knox,  sole  owner  of  Knox  Sparkling 
Gelatine,  who  changed  the  design  of  the  package  of  that  product 
in  August,  1913,  because  she  found  that  when  the  old  packages 
were  placed  in  pyramids  an  optical  illusion  occurred  which  made 
each  carton  seem  to  be  only  half  as  large  as  it  really  was. 

While  it  is  sometimes  considered  dangerous  to  change  the 
design  of  a  package  the  Colgate- Williams  war  would  seem  to 
prove  that  with  sufficient  advertising  behind  it,  a  change  is  at 
other  times  a  talking  point  and  a  distinct  advantage. 

Package  designs  are  often  changed  by  slow  degrees  in  the 
same  way  that  the  Thomas-Detroit  name  was  changed  to  Chal- 
mers, thus  always  giving  the  customer  something  old  by  which 
the  package  may  be  recognized,  while  adding  a  relief  to  sore  eyes 
in  a  new  color  harmony  or  a  new  and  more  distinctive  style  of 
design. 


QUALITY  45 

b.  Is  it  convenient  for  all  of  the  purposes  to  which  it  may  be  put? 
The  package  was  what  made  Shaker  Salt  a  household  neces- 
sity.   When  the  Ammo  can  was  substituted  for  the  Ammonia  bot- 
tle every  housewife  in  the  country  saw  the  advantage. 

The  above  are  examples  of  more  obvious  uses,  a  container 
with  a  stopper  from  which  salt  can  be  easily  poured,  and  a  can 
of  .unevaporable  ammonia  in  solid  form,  to  replace  a  bottle.  The 
Murphy  Varnish  people  discovered  that  boys  were  using  their 
boxes  as  bodies  for  wagons.  Realizing  that,  if  this  trait  was  en- 
couraged they  might  make  moving  advertisements  as  well  as 
friends  of  the  younger  generation,  they  supplied  wooden  wheels. 

Women  use  muslin  flour  sacks  for  dish  towels  and  the  miller 
who  wishes  to  change  to  the  paper  sack  must  estimate  the  num- 
ber of  "dish  towel  customers"  he  will  lose  thereby. 

c.  A?  it  in  any  way  related  to  the  name  or  to  the  article,  to  its 

uses  or  claims  in  color,  in  shape,  or  in  style  of  type? 

Again  we  come  to  the  subject  of  relevancy.  Most  Sunshine 
biscuits  are  put  up  in  packages  with  a  predominance  of  yellow- 
sunshine  color. 

The  most  distinctive  feature  of  Log  Cabin  Maple  Syrup  is 
the  tin  can  retainer  shaped  like  a  log  cabin. 

Most  of  Colgate's  packages  seem  to  be  designed  with  this 
principle  in  mind.  Every  color  tint  used  seems  to  suggest  cleanli- 
ness and  perfumed  elegance.  Even  the  style  of  the  lettering 
seems  to  express  the  same  thought. 

This  appears  to  be  the  height  of  the  art  of  suggestion.  And 
why  should  it  not  be?  We  have  our  "warm"  and  our  "cold" 
colors.  Why  should  they  not  be  made  to  work  for  the  furnace 
advertiser  or  one  who  sells  ice  cream  ?  You  have  probably  heard 
women  exclaim,  "that  package  looks  good  enough  to  eat."  Did 
you  ever  stop  to  think  what  it  may  mean  to  a  producer  of  a  food, 
to  have  his  package  not  look  good  enough  to  eat?  Suppose  it  is 
so  covered  with  dark  greens  and  blues  and  black  that  it  gives  the 
suggestion  of  dirtiness  and  poison.  Rather  let  us  use  those  colors 
which  appeal  to  the  gastric  juices  when  we  are  designing  pack- 
ages for  food  products — light  lettuce  greens  or  rich  crusty  browns. 

In  his  Psychology  and  Industrial  Efficiency  Dr.  Hugo  Miin- 


46  ANALYSIS   OF   THE   PRODUCT 

sterberg  tells  of  an  interesting  example  of  the  use  and  misuse  of 
this  principle. 

"A  certain  kind  of  chocolate  was  sold  under  twelve  different 
labels.  One  of  them  was  highly  successful  in  the  whole  country 
and  one  other  had  made  the  same  article  entirely  unsalable.  The 
other  ten  could  be  graded  between  these  two  extremes.  In  all 
twelve  cases  the  covers  were  decorated  with  pictures  of  women 
with  a  scenic  background. 

"As  long  as  aesthetic  values  were  considered  all  were  on 
nearly  the  same  level,  and  aesthetically  skilled  observers  repeated- 
ly expressed  their  preference  for  some  of  the  unsuccessful  labels. 
But  as  soon  as  an  internal  relation  was  formed  betzveen  the  labels 
and  the  chocolates,  in  one  case  a  mental  harmony  resulted  which 
had  strong  suggestive  power,  in  the  other  cases  a  certain  unrest 
and  inner  disturbance  which  necessarily  had  an  inhibiting  influ- 
.ence.  The  label  which  was  unsuccessful  with  the  sweets  would 
perhaps  have  been  eminently  successful  for  tobacco." 

When  we  consider  that  in  all  probability  only  the  change  from 
a  tobacco  brown  to  a  chocolate  brown  stood  between  a  success 
and  the  failure  of  that  product,  we  see  that  the  matter  of  rele- 
vancy is  well  worth  considering. 


D.    PRICES 

After  quality  comes  price.  There  are  some  who  seem  to  think 
that  price  is  the  greatest  selling  point  in  all  advertising. 

\Ye  will  take  it  for  granted  that  you  are*  conducting  your 
business  under  the  one-price-system — one  price  to  all. 

There  are  a  few  who  attempt  through  advertising  to  establish 
an  inquiry  at  a  certain  price  and  then  as  follow-up  pretend  to  give 
the  particular  inquirer  a  special  advantage  and  cut  prices  until 
"the  sucker  bites."  This  method  is  used  more  frequently  by  those 
who  attempt  to  sell  "fortunes/'  "obesity  cures/'  and  other  such 
fakes  through  the  mail.  Thanks  to  the  Printers'  Ink  Law,  the 
Yigi lance  Committees  of  the  Associated  Advertising  Clubs  of 
America,  and  the  postal  authorities  such  rogues  are  fast  disap- 
pearing from  the  field  of  advertising. 

A  reduced  price  is  a  great  incentive  to  buying.  Every  reduc- 
tion, of  course,  brings  new  buyers  into  your  field.  Most  adver- 
tisers agree,  however,  that  a  reduction  should  always  be  accompa- 
nied by  a  reason  and  that  the  reason  should  be  a  truthful  one 
based  on  the  conditions  of  the  seller  rather  than  the  conditions  of 
the  buyer.  The  old  way  was  to  say,  "because  you  are  a  good  fel- 
low you  can  have  this  for  so  and  so.  Don't  tell  anybody  else." 
The  modern  way  is,  "because  I  must  move  this  stock  before  the 
season  closes,  I  must  sell  at  so  and  so  or  take  a  greater  loss.  Tell 
everybody." 

Since  A.  T.  Stewart,  in  the  early  part  of  the  nineteenth  cen- 
tury, introduced  the  one-price  system,  the  progress  of  merchan- 
dising has  advanced  by  leaps  and  bounds.  Nearly  all  are  now 
agreed  on  this  principle. 

There  are,  however,  two  great  questions  of  price  which  affect 
the  success  of  your  advertising.  These  two  questions  are  closely 
related.  One  is  "price  maintenance''  and  the  other  is  known  as 
"the  quantity  discount." 

1.    t)o  You  ALLOW  QUANTITY  DISCOUNTS? 

Up  to  within  recent  years  the  giving  of  large  discounts  for 
orders  in  large  quantities  was  considered  the  wisest  way  to  mer- 
chandise. Costs  are  lower  both  for  manufacturing  and  distrib- 


48  ANALYSIS  OF  THE  PRODUCT 

uting  in  large  quantities.  Dealers  often  order  more  and  push 
goods  harder  in  order  to  take  advantage  of  such  discounts.  In 
fact,  only  the  other  day  the  salesmanager  of  a  great  national  busi- 
ness told  me  that  the  best  way  he  has  found  to  sell  his  goods  is 
to  load  the  dealers  up  to  such  a  point  that  they  have  to  unload. 

It  has  been  found,  however,  that  in  lines  which  depend  in 
part  upon  their  freshness  for  their  quality,  dealers  will  so  over- 
stock to  take  advantage  of  quantity  discounts  that  goods  become 
stale  before  they  are  sold. 

Furthermore  such  discounts  give  the  large  buyers  an  oppor- 
tunity to  cut  prices  and  to  squeeze  out  the  small  dealers. 

In  the  drug  trade  the  quantity  discounts  are  so  large  that  many 
retail  stores  are  combining  for  the  purpose  of  taking  advantage 
of  these  discounts,  and  herald  themselves  as  "cut  price  stores." 
When  artificial  price-cutting  starts,  there  is  a  danger  of  breaking 
down  of  your  framework  of  distribution. 

For  this  reason  such  great  successful  manufacturers  as  the 
Kellogg  Toasted  Corn  Flake  Company  and  the  Wm.  Wrigley,  Jr. 
Company  have  jobbers',  dealers',  and  consumers'  prices  which  are 
the  same  in  any  quantity. 

While  R.  H.  Ingersoll  &  Brothers,  watch-makers,  sell  Inger- 
soll  $1  watches  under  the  old  method  of  quantity  discounts,  their 
newer  products,  their  higher  priced  watches,  are  sold  without 
quantity  discounts. 

There  are  many  arguments  on  both  sides.  It  is  for  you  to 
determine  how  much  the  question  may  affect  you  in  your  business. 

2.     ARE  PRICES  TO  THE  CONSUMERS  MAINTAINED  OR  CUT? 

If  big  stores  cut  the  price  of  your  article  to  the  consumer  you 
will  probably  find  the  smaller  stores  which  are  unable  to  enter  into 
competition  discontinuing  your  line.  Thus  your  entire  distribu- 
tion system  may  crumble. 

There  is  now  considerable  data  both  pro  and  con  on  the  sub- 
ject. 

If  you  should  decide  that  you  should  maintain  the  retail  price 
of  your  article,  the  question  is  how  can  you  do  it  ?  While  there  is 
a  law  in  the  state  of  New  Jersey  protecting  manufacturers  against 
this  evil,  and  there  will  soon  be  similar  laws  in  other  states,  the 


PRICES  49 

best  methods  of  protecting  prices  of  advertised  goods  seem  to 
come  through  moral  suasion. 

The  most  natural  method  of  maintaining  such  prices  is  to  re- 
fuse again  to  sell  to  those  merchants  who  persist  in  cutting  prices. 
While  the  Supreme  Court  rules  that  you  can  not  hold  such  a  club 
over  your  trade  it  is  usually  not  a  hard  thing  to  discontinue  busi- 
ness relations.  Often  the  credit  of  the  dealer  is  found  to  be  un- 
satisfactory—  (it  usually  is  unsatisfactory  anyway). 

If  you  sell  but  one  dealer  in  a  town  or  through  your  own  ex- 
clusive agencies,  your  problem  is  easier.  All  you  have  to  do  is  to 
transfer  the  agency.  The  American  Fair  Play  League  is  now 
working  toward  a  better  understanding  on  this  most  important 
subject  and  it  is  to  be  hoped  that  more  favorable  legislation  will 
result. 

3.     How  DO  YOUR  PRICES  COMPARE  WITH  COMPETITION  IN  THE 

FOLLOWING? 

a.  To  jobbers. 

b.  To  retailers. 

c.  To  consumers. 

Xo  particular  comment  is  necessarv  to  impress  one  with  the 
vital  importance  of  this  question. 

Prices,  like  water,  must  find  a  level  sometime. 

Quality  alone  is  an  excuse  for  higher  prices  than  those  of  one's 
competitor. 

Some  of  the  greatest  failures  of  advertised  goods  have  been 
due  to  the  mistaken  notion  that  one  can  make  advertising  pay 
from  the  start  by  tacking  the  cost  of  the  advertising  on  to  the 
prices.  If  your  goods  do  not  have  quality,  don't  advertise.  Re- 
member the  Cremo  Cigars.  Advertising,  by  increasing  volume, 
ultimately  reduces  the  cost  of  both  manufacturing  and  selling  each 
unit.  It  is  said  that  no  concern  to-day  can  afford  to  introduce  a 
cake  of  soap  of  the  size  and  quality  of  Ivory.  This  new  company 
would  lose  money  on  every  cake  for  years  until  it  became  able 
to  manufacture  in  sufficiently  large  quantities  to  compete  with 
Ivory.  This  is  what  continuous  advertising,  backed  by  increased 
quality,  will  do  for  a  product.  If  you  delay  advertising  now,  you 
may  find  that  some  competitor  has  entered  "the  game"  and  has 
progressed  so  far  in  the  confidence  of  the  public  and  in  cutting 
costs  by  increasing  volume  that  you  never  can  catch  up  with  him. 


E.  PROFITS 
How  do  your  profits  compare  with  competition  in  the  following? 

1.  For  the  manufacturer. 

2.  For  the  jobber. 

3.  For  the  retailer. 

In  many  lines  the  idea  of  "forcing  the  dealer"  still  prevails. 
Some  dealers  are  quite  antagonistic  to  all  advertising  for  this  rea- 
son. 

Too  high  a  profit  invites  the  cutting  of  prices ;  too  low  a  profit 
puts  the  dealer  out  of  business. 

A  few  years  ago  a  manufacturer  of  a  breakfast  food  who  gave 
in  each  package  a  silver  spoon  decided  to  discontinue  the  spoon. 
The  spoon  cost  just  about  the  same  as  the  food  and  the  manu- 
facturer did  not  know  whether  he  was  selling  spoons  or  break- 
fast food.  His  dealers  were  making  21  per  cent.  Grocers  esti- 
mate that  it  costs  them  17  per  cent  to  do  business.  The  net  profit 
the  grocers  made  in  his  article  was  only  4  per  cent.  He  found 
that  if  he  eliminated  the  spoons  he  could  afford  to  give  the  dealer 
28  per  cent  and  still  make  the  profit  he  made  the  year  before  even 
if  he  sold  35  per  cent  less  than  the  year  before. 

He  expected  to  lose  some  business  when  he  eliminated  the 
spoon.  The  question  was  how  much?  He  could  afford  to  lose 
35  per  cent.  To  his  surprise,  the  dealers  seemed  so  much  to 
appreciate  the  additional  profit  that,  instead  of  losing  about  30  per 
cent  of  the  trade  as  was  anticipated,  the  business  without  the 
spoon  showed  a  gain  over  the  year  before  of  5  per  cent. 

The  Commercial  Research  Division  of  the  Curtis  Publishing 
Company  reports  that  45  per  cent  of  the  jobbers  and  54  per  cent 
of  the  dealers  who  are  opposed  to  advertised  articles  base  their 
objection  on  the  ground' that  their  profit  on  advertised  goods  is 
too  low.  No  concern  has  a  right  to  cut  the  percentage  of  profit 
to  the  jobber  or  the  dealer  when  it  begins  to  advertise.  But  as 
total  profit  depends  on  the  "turn  over,"  if  a  manufacturer,  after 
years  of  advertising,  can  prove  that  he  has  increased  a  dealer's 
total  profit  and,  in  order  to  increase  it  still  more,  wishes  to  cut 
his  own  prices  to  jobbers  and  dealers  as  well  as  dealers'  prices  to 


PRICES  51 

consumers,  he  certainly  has  a  right  to  do  so.  This  is  a  very  dan- 
gerous undertaking,  however,  and  should  not  be  considered  before 
a  complete  investigation  of  trade  conditions. 

Before  we  take  up  the  next  subject,  your  markets,  ask  your- 
self if  there  are  not  some  other  questions  which  you  may  wish 
to  have  answered  in  relation  to  the  demand,  the  supply,  the  qual- 
ity, the  prices,  or  the  profits  of  your  product.  When  these  ques- 
tions are  satisfactorily  answered,  we  shall  be  prepared  to  enter 
the  market  with  eyes  open  and  steps  alert,  confident  of  success 
and  fearing  no  enemy. 


Httteratg 


GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  II.    ANALYSIS  OF  THE  MARKETS 

BY 

MAC  MARTIN 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  9.    FEBRUARY  1914 


Entered  at  the  Poat-Office 

Minneapolis  as  second -class  matter 

Minneapolis,  Minn. 


0f 


GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  II.    ANALYSIS  OF  THE  MARKETS 

BY 
MAC  MARTIN 

PROFESSORIAL  LECTURER  IN  ADVERTISING,  PRESIDENT  MINNEAPOLIS 

ADVERTISING  FORUM,  MEMBER  EXECUTIVE  COMMITTEE 

ASSOCIATED  ADVERTISING  CLUBS  OF  AMERICA 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  9.    FEBRUARY  1914 


Entered  at  the  Post-Office 

Minneapolis  as  second-class  matter 

Minneapolis,  Minn. 


COPYRIGHT  1914 
THE  UNIVERSITY  OF  MINNESOTA 


PLANNING    AN    ADVERTISING    CAMPAIGN 
FOR  A  MANUFACTURER 

PART  II.    ANALYSIS  OF  THE  MARKETS 

This  analysis  applies  to  the  product  analyzed  in  Part  I.  Each 
member  of  the  class  has  chosen  a  product  with  which  he  is 
familiar  and  is  applying  the  experience  of  others  in  determining 
the  most  profitable  policies  and  methods  of  procedure  in  selling 
the  particular  product  or  group  of  products  which  he  has  chosen. 

After  reading  the  comments  under  each  head  contained  in 
the  body  of  this  pamphlet  and  applying  them,  the  references,  and 
his  own  experiences  to  the  particular  case,  the  reader  is  expected 
to  answer  all  questions  which  apply  to  his  product,  to  make  mar- 
ginal and  interlinear  notes,  and  to  add  other  questions  and  refer- 
ences which  seem  to  apply. 

Name  of  Product  and  Geographical  Extent  of  Present  Market 


A.  GEOGRAPHICAL — 

1.  Is  your  field  international? national? 


territorial? or  local? pp.  58-59. 

Mahin  Advertising  Data  Book,  1913-1914,  pp.  420-22. 

United  States  Daily  Consular  Reports. 


2.  Is  your  field  in  cities  ? small  towns  ? , 

63 


54  ANALYSIS  OF  THE  MARKETS 

or  in  rural  districts  ? pp.  59-60. 

Mahin  Advertising  Data  Book,  1913-1914,  pp.  414-20,  438. 
Curtis  Publishing  Co.,  Selling  Forces,  pp.  263-74. 

B.  CLIMATIC — 

Reports  Weather  Bureau,  United  States  Department  of  Agriculture. 

1.  Is  your  greater  field  in  warm? or  cold 

climates? p.  61. 

2.  Is  purchase  more  often  made  in  sunshine  ? 

or  in  rain? p.  61. 

3.  When  do  your  selling  seasons  commence  and  what  is  the 

length  of  each  season? pp.  61-62. 

(If  you  have  both  dealer  and  consumer  seasons,  list 
each  separately)    


C.  SEASONAL — 

At  what  time  and  under  what  conditions  does  an  individual 
come  into  your  market? pp.  63-64. 


Any  good  Clipping  Bureau. 
Dodge  Lists. 

D.  SOCIAL — 

1.  Is  purchase  more  often  made  by  men  ? 

by  women  ? or  by  children  ? 

p.  66. 


OUTLINE  55 


Hollingworth,   Harry    L,,   Advertising     and   Selling,   pp.   287- 

305. 
Strong,  Edward  K.,  Jr.,  Relative  Merits  of  Advertisement,  pp. 

78-81. 

Gale,  Harlow,  Psychological  Studies,  pp.  67-9. 
Curtis  Publishing  Co.,  Selling  Forces,  pp.  229-62. 
Mahin  Advertising  Data  Book,  1913-1914.  pp.  403-8,  435. 


2.  Is  purchase  made  by  rich? 


middle-class  ? or  poor  ? p.  66. 

Mahin  Advertising  Data  Book,  1913-1914,  pp.  408-14,  423-24, 
448-68. 

3.  Is  purchase  made  by  married? or  single? 

: P.  66. 

Reports  of  marriage  licenses  issued  may  be  obtained  from  any 
newspaper,  from  clerks  of  District  Courts,  or  from  any  good 
Clipping  Bureau. 

4.  Is  purchase  made  by  young? middle-aged? 


or  old  ? p.  67. 

Mahin  Advertising  Data  Book,  1913-1914,  p.  439. 

E.  FINANCIAL — 

1.  Are  "times  good" or  "bad" for  the 

sale  of  your  product  ? p.  68. 

R.  G.  Dun  &  Co.,  Monthly  Reports. 

Bradstreet  Mercantile  Agency,  Monthly  Reports. 

2.  Are  transportation  charges  low or  high 

for  your  product  ? p.  68. 

F.  COMPETITIVE — 

Bradstreet  Mercantile  Agency,  Special  Reports. 
R.  G.  Dun  &  Co.,  Special  Reports. 

1.  How  many  competitors  have  you? p.  69. 

R.  G.  Dun  &  Co.,  Lists. 
R.  L.  Polk  Co.,  Lists. 


56  ANALYSIS  OF  THE  MARKETS 

2.  How  long  has  each  been  established  and  how  long  has 

each  been  advertising? p.  70. 

3.  What  is  the  present  total  business  of  each  on  this  product  ? 

p.  70. 


Mahin  Advertising  Data  Book,  1913-1914,  pp.  424-26-33-34. 
4.  How  much  increase  or  decrease  has  each  experienced  dur- 
ing a  period  of  years  up  to  the  present  time?,  .pp.  70-71. 


5.  What  territory  does  each  cover  at  present? p.  71. 

6.  What  are  the  policies  of  each  in  regard  to 

a.  Sales p.  71. 

b.  Advertising p.  72. 

Any  national  clipping  bureau. 

c.  Credits pp.   72-73. 


G.  DISTRIBUTIVE — 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp.  52-53. 
Mahin  Advertising  Data  Book,  1913-1914,  pp.  477-80. 
R.  L.  Polk  &  Co.,  Lists. 
R.  G.  Dun  &  Co.,  Lists. 


OUTLINE  57 

1.  How  many  purchasers  have  you  at  present  among  jobbers? 

dealers  ? consumers  ? 

P- 74. 

2.  How  many  possible  purchasers  of  your  product  are  there 

among  jobbers  ? dealers  ? 

consumers  ? pp.  74-75. 


PART  II.     ANALYSIS  OF  THE  MARKETS 

In  Part  I  you  answered  the  question,  what  have  you  to  adver- 
tise? In  this  part,  the  analysis  of  the  market,  we  shall  take  up 
your  advertising  from  the  standpoint  of  where,  when,  and  to 
whom? 

In  the  days  of  wait-for-the-trade-to-come-to-you  a  market 
meant  nothing  more  than  a  central  place  where  a  vender  of  mer- 
chandise would  go  and  sit.  If  a  certain  market  was  deemed 
profitable  or  competitors  were  found  in  that  locality,  merchants 
would  go  there  or  would  send  a  salesman  "to  see  what  he  could 
do." 

In  the  days  of  modern  advertising  it  is  necessary  for  a  mer- 
chant to  study  his  markets  in  advance.  This  is  one  lesson  that 
modern  advertising  has  of  necessity  added  to  merchandising. 

As  we  study  the  market,  keep  in  mind  your  answers  to  the 
questions  about  your  product. 

The  answers  which  you  make  here  in  regard  to  your  market 
will  also  assist  you  in  choosing  your  advertising  media,  for  nowa- 
days no  sooner  does  a  market  appear  than  up  springs  an  adver- 
tising medium,  or  a  flock  of  media,  claiming  to  be  able  to  carry 
your  message  to  that  market. 

Remember  also  that  markets  are  constantly  changing.  What 
may  have  been  your  most  profitable  market  yesterday  may  not 
be  your  most  profitable  market  to-day.  New  customs,  new 
habits,  and  new  inventions  make  new  markets. 

A.     GEOGRAPHICAL 

1.  Is  YOUR  FIELD  INTERNATIONAL,  NATIONAL,  TERRITORIAL,  OR 

LOCAL? 

The  Industrial  Commissioner  of  a  large  city  once  told  me 
that  he  estimated  that  fully  ninety  per  cent  of  the  manufacturing 
plants  of  this  country  are  not  situated  efficiently  in  relation  to 
their  markets. 

58 


GEOGRAPHICAL  59 

A  factory  springs  up  in  a  certain  place  because  capital  is  avail- 
able at  that  place,  because  there  appears  to  be  some  immediate 
local  demand,  or  because  some  plant  manufacturing  the  same 
product  is  already  situated  at  that  place;  and  no  reckoning  is 
taken  of  the  possible  extent  of  the  true  market. 

There  is  a  great  manufacturing  institution  in  Madison,  Wis- 
consin, which  was  established  in  1886.  At  the  Chicago  World's 
Fair  in  1903  the  president  of  the  company  began  to  study  mar- 
kets and  discovered  that  his  market,  instead  of  being  confined 
to  a  territory  covering  a  few  states,  was  international,  and  that 
his  greatest  market  was  in  Europe  and  Asia.  To-day  the  greater 
proportion  of  his  product  is  sold  on  the  continent  of  Europe  and 
his  advertising  is  prepared  in  all  civilized  languages.  It  is  inter- 
esting to  note  that  a  few  years  ago  two  competitors  came  and 
squatted  right  down  beside  him  so  that  to-day  Madison,  Wiscon- 
sin, situated  away  from  the  market  and  the  sources  of  raw  ma- 
terial as  well,  is  the  center  of  the  world  for  the  manufacturing 
of  that  product. 

Some  products,  however,  which  seem  to  have  national  or 
even  international  possibilities  are  found,  after  a  study  of  the 
customs  of  the  people  in  other  parts  of  the  country,  to  have 
markets  confined  only  to  a  restricted  territory. 

The  United  States  Daily  Consular  Reports  are  said  to  be 
more  complete  on  the  subject  of  markets  than  those  furnished 
by  any  other  country  in  the  world.  These  are  indexed  and  avail- 
able at  most  public  libraries,  or  your  congressman  will  have 
them  sent  to  you  free  of  charge. 

In  this  country  most  markets  radiate  around  cities  and  in  most 
large  cities  there  are  Boards  of  Trade,  Chambers  of  Commerce, 
Commercial  Clubs  or  Associations  of  Commerce,  one  of  whose 
offices  it  is  to  impart  up-to-date  information  on  conditions  in 
local  markets.  The  advertising  departments  of  some  newspapers 
will  furnish  you  this  information. 

2.  Is  YOUR  FIELD  IN  CITIES,  SMALL  Towxs,  OR  ix  RURAL  DIS- 
TRICTS? 

The  criticism  has  often  been  made  that  flour  advertising  is 
misplaced  when  it  is  directed  to  the  larger  cities,  as  the  women 


60  ANALYSIS  OF  THE  MARKETS 

in  the  larger  cities  do  not  bake  their  own  bread.  They  either  buy 
bakers'  bread  or  it  is  baked  by  servants.  An  investigation  made 
by  the  National  Association  of  Master  Bakers  shows  that  in  the 
city  of  Chicago  sixty-five  per  cent  of  the  families  use  bakers' 
bread  exclusively. 

Those  who  wish  to  sell  space  in  farm  journals  are  sure  that 
millers  will  find  their  greatest  field  in  the  country,  while  investi- 
gations made  by  millers  tend  to  show  that  the  average  farmer 
uses  more  vegetables  and  therefore  less  flour  than  the  resident  of 
the  small  town. 

It  is  the  province  of  the  advertising  man  to  determine  his 
most  profitable  field  and  to  study  the  habits,  customs,  likes,  and 
dislikes  of  the  people  in  that  field  so  that  he  may  not  only  know 
the  people  he  is  talking  to,  but  so  that  he  may  talk  to  them  in 
their  own  language. 


B.     CLIMATIC 

Most  advertisers  realize  how  much  the  climate  and  the 
weather  affect  sales,  but  few  seem  to  know  how  to  take  advan- 
tage of  these  conditions  and  plan  for  them  in  advance. 

The  facilities  of  the  great  United  States  Weather  Bureau  are 
at  the  disposal  of  those  advertisers  who  know  how  to  take  ad- 
vantage of  them.  Most  advertising  managers  of  department 
stores  keep  in  close  touch  with  these  reports. 

Bakers  are  said  to  rely  upon  weather  reports  to  determine 
each  day  the  amount  of  bread  that  will  be  consumed.  If  it  is 
to  be  a  cold  or  rainy  day,  a  greater  proportion  of  housewives 
will  probably  bake  their  own  bread.  If  it  is  to  be  a  hot  day,  they 
may  not  care  to  make  the  exertion  and  if  it  is  to  be  a  beautiful, 
sunny  day,  they  will  probably  prepare  to  go  calling  or  shopping. 
After  years  of  experience  bakers  are  said  to  gauge  quite  ac- 
curately the  day's  demand  in  this  way. 

1.  Is  YOUR  GREATER  FIELD  ix  WARM  OR  COLD  CLIMATES? 

Suppose  you  were  selling  ice-skates,  furs,  mufflers,  sleds, 
sleigh-bells,  sun  helmets,  fans,  seeds  or  bulbs.  A  careful  study 
of  climatic  conditions  will  show  you  the  centers  of  your  most 
natural  markets. 

2.  Is  PURCHASE  MORE  OFTEN  MADE  ix  SUXSHIXE  OR  ix 
THE  RAIX? 

If  your  article  happens  to  be  rubbers,  rubber  coats,  or  um- 
brellas, a  study  of  the  average  rainfall  in  different  sections  may 
assist  in  determining  your  most  profitable  markets. 

3.  WHEX  DO  YOUR  SELLIXG  SEASOXS  COMMENCE  AXD  WHAT 
is  THE  LEXGTH  OF  EACH  SEASOX  ? 

You  will  remember  that  you  have  already  considered  the  ad- 
visability of  extending  the  length  of  your  seasons.  If  you  are 
selling  straw  hats,  underwear,  or  awnings  you  will  find  that 
climatic  conditions  and  unswerving  customs  will  arbitrarily  fix 
your  seasons  for  you  and  you  must  time  your  advertising  accord- 

61 


62  ANALYSIS  OF  THE  MARKETS 

ingly.  It  must  be  borne  in  mind,  however,  that  seasons  come 
much  earlier  in  some  parts  of  the  country  than  in  others.  Spring 
clothing  is  sold  in  New  Orleans  during  March,  while  in  Duluth 
May  is  often  early. 

There  are  two  seasons  for  selling  underwear.  The  summer 
season  commences  in  some  sections  as  early  as  May  and  rarely 
lasts  longer  than  eight  weeks.  The  winter  season  commences 
in  November  and  rarely  lasts  longer  than  six  weeks.  The  adver- 
tising of  such  concerns  is  timed  to  commence  about  a  month  in 
advance  of  each  season  so  that  one  has  begun  to  think  of  that 
particular  brand  of  underwear  before  nature's  climatic  conditions 
make  the  suggestion  a  command. 

The  season  for  wearing  straw  hats  is  supposed  by  custom  to 
commence  promptly  on  June  the  first  and  to  end,  as  promptly,  on 
September  the  first.  But  this  is  not  the  buying  season'.  If  every- 
one marched  out  on  June  first  with  a  new  straw  hat,  that  day 
would  be  the  only  day  throughout  all  of  the  year  that  there  would 
be  any  sale  for  straw  hats  unless  one's  hat  wore  out  or  blew 
away  before  September  first.  As  a  matter  of  fact  the  season 
lasts  about  three  weeks  and  lucky  indeed  is  the  dealer  who  by 
cutting  prices  many  times  is  able  to  dispose  of  the  rest  of  his 
stock  to  those  whose  hats  wear  out  before  September  first. 

If  you  were  advertising  straw  hats  you  would  probably  want 
your  advertisements  ready  and  in  the  hands  of  the  local  news- 
papers by  the  first  of  May. 

For  those  who  sell  through  dealers  there  are,  of  course,  two 
classes  of  season,  the  dealers'  seasons  and  the  consumers'  sea- 
sons. With  some  products,  namely,  automobiles,  these  seasons 
are  practically  the  same.  With  others,  as  wearing  apparel,  there 
may  be  six  months  between  the  time  the  dealers  order  and  the 
consumers'  seasons.  The  advertising  man  knows  this  and  pre- 
pares his  literature  accordingly.  He  usually  prepares  his  "dealer 
literature"  and  his  "consumer  literature"  for  one  year's  work  at 
the  same  time  so  that  he  may  show  the  dealers  reproductions  of 
the  "consumer  literature"  which  is  to  appear  later.  In  these 
days  the  dealer,  after  satisfying  himself  as  to  the  quality  of  the 
goods,  next  wishes  to  satisfy  himself  as  to  the  quality  and  the 
quantity  of  the  advertising  which  will  assist  in  creating  the  de- 
mand for  those  goods. 


C.     SEASONAL 

AT  WHAT  TIME  OR  UNDER  WHAT  CIRCUMSTANCES  DOES  AN 
INDIVIDUAL  COME  INTO  YOUR  MARKET? 

There  is  another  way  of  subdividing  the  buying  season  which 
may  be  of  even  greater  advantage  to  the  advertising  man,  but 
which  may  require  considerable  imagination  to  discover. 

A  laundryman  holds  the  greater  amount  of  trade  in  a  large 
city.  He  can  not  count  on  increasing  his  business  to  any  extent 
except  under  two  conditions :  (a)  when  people  have  not  been 
well  treated  by  competitors  and  are  ready  to  make  a  change;  (b) 
when  new  families  move  to  the  city.  To  reach  his  market  he 
uses  street-car  cards.  To  reach  the  second  class  particularly,  he 
writes  letters  to  lists  of  newcomers  furnished  him  by  a  clipping 
bureau.  These  letters  welcome  the  newcomer  and  offer  the 
laundryman's  services. 

Paint  manufacturers  have  such  large  lines  that  once  a  dealer 
has  put  in  a  line  he  can  not  well  afford  to  change  to  another 
without  a  great  sacrifice. 

A  paint  manufacturer  has  a  clipping  bureau  furnished  him 
with  records  of  all  fires  and  removals  of  paint  dealers  in  his  ter- 
ritory. This  information  prepares  him  both  to  secure  new  cus- 
tomers and  to  hold  old  ones. 

A  large  retail  store  making  a  specialty  of  boys'  clothing  keeps 
records  of  the  birthdays  of  all  of  its  boy  customers  and  writes 
each  boy  a  letter  on  his  birthday. 

Marriages,  wedding  anniversaries,  births,  and  birthdays  are 
all  times  which  call  for  changes  and  bring  buyers  into  markets. 

A  photographer  keeps  track  of  birthdays  of  children  and 
each  year  writes  their  parents  a  courteous  letter  reminding  them 
that  their  children  are  growing  up,  that  another  milestone  is 
about  to  be  passed  and  that  the  picture  of  the  child  at  this  age 
can  not  be  obtained  next  year.  He  secures  many  sittings  in 
response  to  this  automatic  system. 

A  jeweler  keeps  track  of  wedding  anniversaries  and  not  only 
obtains  much  business  through  this  effort,  but  probably  prevents 
many  family  catastrophies  by  reminding  husbands  of  this  impor- 
tant, but  forgetable,  date. 

63 


64  ANALYSIS  OF  THE  MARKETS 

A  house  furnisher  puts  most  of  his  sales  effort  on  moving 
time,  and  through  transfer  companies  obtains  names. 

Some  great  businesses  are  built  up  entirely  on  reports  re- 
ceived from  clipping  bureaus. 

The  Jensen  Artificial  Limb  Company  sells  over  $75,000  worth 
of  artificial  limbs  every  year  to  unfortunates  whose  names  are 
learned  through  reports  of  accidents  furnished  by  clipping  bu- 
reaus. 

Brick  manufacturers  secure  reports  not  only  of  the  letting  of 
all  building  permits,  but  of  the  contemplated  building  of  all 
schools,  churches,  and  public  buildings. 

A  careful  study  of  any  business  often  reveals  a  particular 
condition  when  many  new  buyers  enter  a  market. 


D.     SOCIAL 

The  analysis  of  the  classes  of  people  who  will  purchase  your 
product  is  probably  the  most  interesting  of  all.  In  this  connec- 
tion there  are  two  elements  to  take  into  consideration :  ( 1 )  who 
makes  the  purchase,  and  (2)  who  influences  the  purchase. 

I  buy  the  typewriters  for  my  office,  but  my  stenographer  uses 
them.  I  know  from  experience  nothing  about  the  merits  of  type- 
writers. The  advertising  I  see  may  influence  me  in  the  purchase, 
but  my  judgment  is  formed  by  my  stenographer's  say  so.  I  may 
think  I  am  buying  a  typewriter  (and  it  is  well  for  both  the  sales- 
man and  the  advertisement  to  flatter  me  into  that  belief),  but  it  is 
not  really  I  who  buys  it.  It  is  my  stenographer  who  makes  that 
purchase  and  it  is  perhaps  more  important  "to  sell  her"  than 
"to  sell  me." 

Remember  that  in  this  analysis  we  are  determining  not  only 
the  extent  of  your  advertising,  but  through  a  study  of  geography 
and  people  are  determining  your  most  profitable  sales  appeal. 

Many  advertising  managers  deem  it  advisable  to  visit  differ- 
ent territories  in  which  their  product  is  sold  so  that  they  may  get 
acquainted  with  the  classes  of  people  to  whom  they  speak. 

It  is  told  of  Edward  Bok  that  one  day  while  driving  through 
a  small  town  he  saw  a  lady  sitting  on  a  porch  who  seemed  to 
attract  his  attention.  There  was  nothing  about  the  woman  to 
cause  any  particular  interest.  She  seemed  to  be  plainly  but  neatly 
dressed.  Her  home  was  well  kept  and  showed  some  individu- 
ality. She  seemed  to  possess  the  average  amount  of  intelligence 
and,  as  a  little  girl  came  through  the  doorway  just  as  Mr.  Bok 
was  passing,  he  decided  that  she  was  a  mother.  That  was  all. 
Yet  the  impression  of  that  woman  remains  still  in  his  memory. 
She  was  the  woman  for  whom  he  had  been  seeking.  She  is  the 
typical  subscriber  to  the  Ladies'  Home  Journal.  She  is  the  per- 
sonification of  the  average.  She  is  the  woman  for  whom  the 
Ladies'  Home  Journal  is  written.  She  is  his  absolute  dictator, 
his  supreme  master ;  it  is  her  fifteen  cents  that  makes  his  hun- 
dreds of  thousands  of  dollars. 

Fortunate  is  the  advertiser  who  has  as  clearly  pictured  in  his 
mind  the  person  to  whom  he  intends  to  talk. 

65 


66  ANALYSIS  OF  THE  MARKETS 

1.  Is  PURCHASE  MORE  OFTEN  MADE  (OR  MOST  INFLUENCED)  BY 
MEN,  WOMEN,  OR  CHILDREN? 

The  arguments  by  the  representatives  of  different  media  have 
made  this  apparently  easy  question  quite  a  hard  one  for  some 
advertisers  to  answer.  While  Dr.  Hollingworth's  psychological 
experiments  performed  at  Columbia  University  tend  to  show 
that  women  buy  men's  clothing  eleven  times  more  than  men  buy 
women's  goods,  yet  in  advertising  men's  clothing  it  is  hardly 
considered  safe  to  run  the  chances  of  insulting  the  intelligence 
of  men  by  appealing  to  women  alone. 

Most  of  us  poor  men  have  some  sympathy  for  the  man  for 
whom  his  wife  was  purchasing  collars.  His  wife  did  not  remem- 
ber the  size.  The  clerk  suggested  that  perhaps  it  was  thirteen 
and  a  half.  The  wife  recognized  the  size  at  once  but  expressed 
her  surprise  that  the  clerk,  who  had  never  seen  her  husband, 
should  know  the  size  of  his  collar.  "Oh,  that  is  nothing,  madam," 
replied  the  clerk,  "thirteen  and  a  half  is  the  size  of  collars  worn 
by  most  men  whose  wives  buy  their  collars  for  them." 

2.  Is  PURCHASE  MADE  BY  RICH,  MIDDLE-CLASS,  OR  POOR? 

Sixty-four  per  cent  of  the  families  of  the  United  States  live 
on  incomes  of  less  than  $900  a  year  and  ninety-three  per  cent  on 
incomes  of  less  than  $3,000. 

Determine  the  average  income  of  the  family  which  can  afford 
to  use  your  product  and  you  begin  to  get  the  size  and  extent  of 
your  market. 

As  the  average  income  varies  in  different  localities,  so  you 
may  find  that  your  market  varies. 

3.  Is  PURCHASE  MADE  BY  MARRIED  OR  SINGLE? 

While  a  young  lady  may  be  associated  with  household  articles 
all  of  her  life,  she  seldom  becomes  interested  in  the  purchase  of 
such  articles  until  she  is  married  and  until  then  it  is  of  very  little 
use  to  advertise  to  her. 

Many  concerns  keep  careful  records  of  marriages.  This  is 
one  of  the  principal  sources  of  supply  for  insurance  solicitors. 


SOCIAL  67 

4.  Is  PURCHASE  MADE  BY  YOUNG,  MIDDLE-AGED,  OR  OLD  PEOPLE? 

A  certain  magazine  was  thought  to  be  an  ideal  medium  for 
a  certain  product  until  it  was  found  that  the  magazine  was  circu- 
lated only  among  old  people  while  the  article  was  sold  only  to 
young  people. 

A  fashionable  tailor  who  holds  the  greatest  portion  of  the 
wealthy  trade  in  a  certain  city  once  told  me  of  an  interesting 
trait.  He  said,  "While  the  greater  part  of  my  trade  is  old  men, 
have  you  noticed  that  I  advertise  only  to  young  men?  When 
a  young  man  begins  to  consider  tailor-made  clothes,  he  has  passed 
the  age  of  to-be-a-man-I-must-look-like-papa.  He  begins  to  think 
that  the  old  man  is  a  little  seedy.  Just  at  that  age  also  a  father 
is  very  proud  of  his  son.  I  have  found  that  (contrary  to  what 
might  be  supposed  to  be  natural)  you  can  not  expect  a  young 
man's  trade  just  because  you  hold  his  father's  trade,  but  that  you 
can  often  get  the  father's  trade  through  the  son." 

You  may  be  able  to  divide  and  subdivide  the  classes  of  people 
in  your  market  until  you  have  an  exact  picture  of  the  average 
of  the  group  to  whom  you  wish  to  talk.  Perhaps  you  are  selling 
only  to  professional  men,  or  only  to  clerks,  or  only  to  skilled 
mechanics.  Perhaps  your  product  appeals  only  to  mothers,  per- 
haps only  to  society  women.  Here  is  an  important  point.  A 
woman  can  be  both  a  mother  and  a  society  woman.  The  ques- 
tion is  to  which  side  of  her  nature  do  you  wish  to  appeal  when 
you  sell  your  product.  At  one  time  she  may  be  in  one  group  and 
at  another  time  in  another. 

As  the  first  of  his  famous  ten  tests  for  an  advertisement  John 
Lee  Mahin  puts  the  question  of  whether  or  not  an  advertisement 
is  institutional,  that  is,  appears  to  the  "group  spirit"  of  the  people 
to  whom  it  is  directed. 


E.     FINANCIAL 

1.  ARE  "TIMES  GOOD''  OR  "BAD"  FOR  THE  SALE  OF  YOUR 
PRODUCT  ? 

By  studying  the  crop  records,  the  banking-  power,  the  scale 
of  wages,  and  land  values  in  any  district  you  can  secure  some 
valuable  information  in  relation  to  the  purchasing  power  of  that 
district. 

Many  advertisers  become  easily  frightened  by  a  cry  of  hard 
times. 

Some  of  our  greatest  fortunes  have  been  obtained  by  in- 
vesting when  others  are  in  panic.  Articles  are  often  developed 
to  take  advantage  of  "hard  times."  Such  a  case  is  that  of  Karo 
Corn  Syrup  which  was  introduced  at  the  time  of  a  financial  panic 
and  obtained  immediate  success  because  people  welcomed  a 
spread  for  bread  that  was  cheaper  than  butter  and  jam. 

2.  ARE  TRANSPORTATION   CHARGES   Low   OR   HIGH   FOR   YOUR 

PRODUCT  ? 

In  certain  businesses  transportation  charges  greatly  limit 
markets  and  new  factories  or  distributing  depots  have  to  be  estab- 
lished before  it  becomes  advisable  to  advertise  in  certain  sections. 
The  sale  of  many  food  products  is  retarded  on  the  Pacific  Coast 
on  account  of  freight  charges.  Until  1913  Cream  of  Wheat  sold 
for  twenty  cents  on  the  Pacific  Coast.  Now  this  company  lays 
down  the  product  in  any  part  of  the  United  States  at  a  uniform 
price. 


68 


F.     COMPETITIVE 

Until  recent  years  it  was  believed  that  competition  was  the 
mother  of  advertising.  People  said:  "Why  advertise  when  I 
get  all  the  business  anyway  ?"  Xow  that  we  realize  the  power 
which  advertising  has  for  developing  a  demand  and  for  creating 
good  will,  we  no  longer  hear  such  expressions. 

Competition  is,  of  course,  one  of  the  vital  factors  in  every 
market.  In  fact,  Xorris  A.  Brisco,  author  of  Economics  in  Busi- 
ness, gives  as  his  definition  of  a  market,  "the  place  where  prices 
are  determined  by  competition." 

Some  advertisers  seem  to  do  nothing  but  copy  their  competi- 
tors. This  policy  seems  to  be  just  as  disastrous  as  the  counter 
policy  of  not  regarding  competition.  It  is  always  very  difficult 
to  obtain  reliable  information  in  regard  to  one's  competitors. 
Most  of  it  is  mere  gossip.  There  is  a  vast  difference  between 
the  policy  of  spending  one's  time  gossiping  about  one's  competi- 
tors and  spending  one's  money  to  prepare  written  estimates  and 
to  obtain  reliable  information  about  competitors. 

1.  How  MANY  COMPETITORS  HAVE  You? 

Investigation  seems  to  show  that  the  ideal  market  consists  of 
at  least  three  competitors.  In  an  investigation  of  retail  depart- 
ment stores  made  by  the  Curtis  Publishing  Company  the  story  is 
told  of  a  storekeeper  who  was  doing  a  very  satisfactory  business 
when  he  had  two  competitors.  He  had  an  opportunity  to  buy 
one  competitor  out  and  the  other  failed :  but  to  his  surprise  he 
found  that  when  he  was  alone  in  the  market,  he  did  less  business 
than  before.  He  finally  discovered  that  the  reason  was  that 
most  of  his  old  trade,  before  buying  of  him,  seemed  to  think  it 
necessary  to  investigate  prices  in  a  neighboring  town  and,  as 
there  was  a  feeling  of  added  distinction  in  purchasing  "out  of 
town,"  they  usually  bought  in  the  neighboring  city. 

Too  many  manufacturers  are  prone  to  sweep  this  question 
aside  with  the  rather  egotistical  assertion,  "we  have  no  competi- 
tors." Because  a  concern  makes  an  article  of  inferior  quality  or 
for  a  different  price  is  not  sufficient  evidence  of  its  not  compet- 
ing with  you  in  your  market. 


70  ANALYSIS  OF  THE  MARKETS 

2.  How  LONG  HAS  EACH  BEEN  ESTABLISHED  AND  HOW 

»   LONG  HAS  EACH  BEEN  ADVERTISING? 

An  answer  to  this  question  may  determine  the  amount  of 
cumulative  good  will  you  may  have  to  counteract.  It  may  also 
give  you  a  line  on  your  competitors'  enemies. 

3.  WHAT  is  THE  PRESENT  TOTAL  BUSINESS  OF  EACH  ON 

THIS  PRODUCT? 

Accurate  estimates  rather  than  mere  gossip  on  this  point  may 
determine  your  own  share  of  the  total  business  obtainable.  There 
is  hardly  any  necessity  to  elaborate  on  this  question  or  its  impor- 
tance. The  moment  a  manufacturer  begins  to  make  investiga- 
tions on  this  point,  his  surprises  begin.  I  recall  an  engraving 
company  which  was  doing  a  local  business,  prodding  its  sales- 
men to  get  more  business,  and  rinding  on  investigation  that  it  was 
doing  eighty  per  cent  of  the  business  of  its  market,  leaving  the 
remaining  twenty  per  cent  to  be  shared  by  three  competitors. 
No  wonder  advertising  would  not  increase  its  volume.  When 
the  condition  was  discovered,  the  market  was  enlarged,  and  both 
advertising  and  sales  effort  were  directed  to  new  territory. 

4.  How  MUCH  INCREASE  OR  DECREASE  HAS  EACH  EXPERIENCED 
DURING  A  PERIOD  OF  YEARS  UP  TO  THE  PRESENT  TIME? 

A  young  man  with  considerable  capital  and  some  experience 
in  the  wholesale  glass  business  wished  a  place  in  which  to  locate. 
It  took  him  a  long  time  to  decide  between  two  locations,  one  in 
the  center  of  a  fast-growing  territory  but  with  two  old  and  pow- 
erful competitors  and  another  in  a  territory  which  was  not  in- 
creasing so  rapidly  but  with  four  weak  competitors.  He  finally 
cast  his  lot  in  the  growing  territory  and  did  not  understand  the 
rapid  growth  of  his  business  until  one  day  he  learned  that  the 
competitors  whom  he  most  feared  had  been  standing  still  and 
had  not  made  any  increase  for  a  number  of  years,  while  the 
building  operations  in  the  territory  were  increasing  very  fast. 
It  was  another  case  of  the  trade  quietly  slipping  out  of  the  mar- 
ket and  the  entrance  of  a  new  competitor  in  the  field  seemed  to 
stop  the  practice. 


COMPETITIVE  71 

Another  concern  about  to  advertise  in  a  certain  territory, 
found  after  investigation  that  competitors  had  for  several  years 
been  doing  business  without  any  appreciable  increase,  and,  as 
there  was  no  natural  demand  for  the  product  in  that  territory, 
it  was  decided  not  to  make  the  appropriation 

5.  WHAT  TERRITORY  DOES  EACH  COVER  AT  PRESENT? 

Many  manufacturers  keep  careful  record  of  every  move  of 
their  competitors,  and,  whenever  a  new  territory  is  entered  by 
special  sales  and  advertising  effort,  attempt  to  "beat  them  to  it." 

For  this  purpose  are  the  famous  ''flying  squadrons"  of  certain 
national  advertisers.  Advertising  literature  is  prepared  applic- 
able to  any  territory.  High-salaried  special  salesmen  are  ready 
at  a  moment's  notice.  When  news  reaches  the  advertisers  that 
a  certain  sampling  campaign  is  to  be  introduced  by  a  competitor 
in  a  certain  market,  this  literature  and  these  men  are  "fired"  into 
that  territory  with  instructions  to  "stock  the  dealers"  and  other- 
wise to  lead  off  the  attack.  A  few  years  ago  such  a  move  usually 
called  for  a  period  of  price  cutting.  To-day  we  more  often  see 
a  "battle  of  advertising." 

6.  WHAT  ARE  THE  POLICIES  OF  EACH  IN  REGARD  TO 

a.  Sales. — I  know  of  a  concern  which  has  a  competitor  which 
has  the  habit  of  overselling.  It  might  seem  that  to  avoid  substitu- 
tion the  only  way  to  meet  such  competition  would  be  to  oversell 
also.  But  the  sales  manager,  realizing  the  weapon  he  has  in  the 
argument,  instructs  his  men  to  undersell  rather  than  to  oversell 
and  to  make  a  talking  point  of  it.  The  advertising  man  seeing  his 
advantage  calls  the  attention  of  the  public  to  the  fact  that  his 
goods  are  always  fresh  and  the  policy  of  the  competitors  is' made 
to  pay  handsome  returns. 

Salesmen  on  the  road  always  try  to  keep  track  of  the  fre- 
quency of  calls  made  by  salesmen  for  competing  houses,  but  this 
information  seldom  gets  further  than  the  salesman's  hat — unless 
perhaps  he  uses  it  as  an  excuse  for  not  selling  more  goods.  A 
sales  manager,  instructing  his  salesmen  to  turn  in  records  of  the 
dates  of  calls  of  competing  salesmen,  is  often  able  to  keep  track 
of  a  competitor's  salesmen  as  accurately  as  of  his  own. 


72  ANALYSIS  OF  THE  MARKETS 


b.  Advertising. — It  is  not  a  bad  idea  to  have  a  scrap-book  and 
to  keep  in  it  copies  of  advertisements  of  competitors.    There  is  no 
particular  advantage  in  referring  to  it  daily  but  at  the  end  of  the 
year  by  comparing  it  with  the  records  of  sales  you  may  be  able  to 
determine  many  things  more  accurately  than  by  hear-say. 

In  planning  a  campaign  it  is  always  advisable  to  get  a  list  of 
media  i-n  which  each  competitor  has  advertised  and  how  much 
each  medium  has  been  used.  In  active  competition  a  manufac- 
turer always  tries  to  reach  those  his  competitors  are  reaching. 
Do  not  jump  at  the  conclusion,  however,  that  just  because  a 
competitor  is  using  certain  media,  his  investment  is  proving 
profitable.  I  recently  planned  a  national  campaign  for  a  manu- 
facturer who  at  first  insisted  upon  using  every  medium  his  prin- 
cipal competitor  was  using.  I  found  that  in  many  publications 
the  competitor  had  contracts  for  but  one  insertion  and  from  the 
nature  of  the  product  and  the  medium  I  am  certain  he  lost  money. 
On  more  thorough  investigation  I  found  that  this  competitor  was 
simply  a  plunger  and  that  he  had  no  set  plans  or  records  to  guide 
him  in  his  advertising.  I  found,  however,  that  another,  a  much 
younger  and  smaller  competitor,  kept  very  careful  records  of 
returns,  and,  on  using  some  of  the  media  he  used  when  they 
tallied  with  my  own  judgment,  I  found  them  invariably  bringing 
satisfactory  returns. 

c.  Credits. — I  once  had  charge  of  the  advertising  of  a  shoe 
manufacturer  who  had  been  established  for  over  a  half  century. 
Our  greatest  difficulty  seemed  to  be  that  we  were  constantly  los- 
ing the  more  progressive  dealers  and  that  no  amount  of  advertis- 
ing would  convince  our  trade  that  the  shoes  we  made  were  as 
up-to-date  as  those  of  a  certain  competitor.     The  superintendent 
examined  this  competitor's  merchandise  and  I  examined  his  ad- 
vertising.    It  certainly  looked  to  both  of  us  as  though  we  had 
beaten  him  at  every  turn. 

One  morning  on  passing  the  sales  manager's  desk  I  happened 
to  overhear  his  conversation  with  a  salesman  who  was  tendering 
his  resignation.  I  had  some  idea  of  this  salesman's  record  and 
from  the  conversation  I  judged  that  he  was  not  a  man  we  cared 
to  lose.  An  advertising  man  must  always  be  alert  to  complaints 
of  any  kind,  so  I  determined  to  take  this  salesman  out  to  luncheon 
and  to  discover,  if  possible,  his  real  reason  for  leaving.  It  took 


COMPETITIVE  73 

a  long  time  to  draw  it  out,  but  finally  it  came.  "It's  no  fun  sell- 
ing this  line,"  was  his  explanation.  "I'm  only  an  order  taker 
here.  Every  customer  is  in  debt  to  the  house  and  he  doesn't 
dare  to  buy  of  anyone  else.  Quality  doesn't  make  any  difference. 
Salesmanship  doesn't  make  any  difference.  Even  price  doesn't 
make  much  difference.  Your  dealers  don't  have  any  choice. 
The  only  hope  your  dealers  have  is  to  get  out  of  debt,  to  throw 
off  your  yoke,  and  to  buy  where  they  please.  You  can't  make  a 
man  think  you  are  giving  him  a  square  deal  when  you  have  him 
by  the  throat." 

Here  then  was  the  answer  to  our  problem — too  liberal  credits. 
That  which  had  been  fostered  in  the  beginning  as  an  additional 
accommodation  or  service  to  the  trade  had  now  come  home  to 
roost,  and  even  forceful  advertising  could  not  prevail  against  it. 


G.     DISTRIBUTIVE 

1.  How  MANY  PURCHASERS  HAVE  YOU  AT  PRESENT  AMONG  THE 

JOBBERS,  THE  DEALERS,  THE  ULTIMATE  CONSUMERS? 

2.  How  MANY  POSSIBLE  PURCHASERS  ARE  THERE  AMONG  THE 

JOBBERS,  THE  DEALERS,  THE  CONSUMERS? 

In  other  words  how  much  of  the  possible  distribution  have 
you,  and  are  you  reaching-  your  share  of  purchasers  ? 

There  is  a  certain  "school"  (we  might  so  call  them),  that  will 
ask  this  question  this  way,  "What  are  the  chances  of  supplying 
the  demand  you  create  with  your  advertising?  A  woman  reads 
your  advertising,  decides  to  buy  your  product,  and  asks  her 
dealer  for  it.  Are  the  chances  one  in  two  that  her  dealer  will, 
have  it,  are  they  one  in  ten1,  or  one  in  one  hundred?" 

Others  say  that  the  majority  of  people  do  not  make  the  first 
move  in  demanding  advertised  brands.  They  say:  "A  woman 
goes  to  the  grocery  store  to  buy  breakfast  food.  The  grocer 
says :  'We  have  a  number  of  different  kinds.  We  have  Thoma- 
son's  Corn  Flakes  and  we  have  Kellogg's  Corn  Flakes.  You  have 
probably  seen  Kellogg's  advertised.  Many  of  our  customers  like 
it.'  This  woman  has  never  tried  either  but  she  feels  more  fami- 
liar with  Kellogg's  because  she  has  heard  of  it  and  she  has  never 
heard  of  Thomason's.  If,  after  trying  it,  she  decides  she  likes 
Kellogg's,  the  next  time  she  comes  to  buy  she  may  ask  for  Kel- 
logg's but  she  will  not  ask  the  first  time." 

There  is  still  another  "school"  (this  theory  was  quite  preva- 
lent ten  years  ago)  who  say,  "Force  the  dealer.  By  advertis- 
ing you  can  create  such  a  demand  that  dealers  will  have  to  carry 
your  goods." 

Many  advertisers  are  perplexed  with  the  question :  "Shall  I 
advertise  to  get  distribution  or  attempt  to  get  distribution  before 
I  begin  to  advertise?" 

The  problem  of  distribution  is  a  great  deal  like  the  problem 
of  the  Irishman's  boots,  they  were  so  tight  that  he  could  not  get 
them  on  until  he  had  worn  them  a  year. 

Wm.  H.  Ingersoll  says  in  Printer's  Ink,  March  9,  1911, 
"Neither  distribution  nor  demand  can  precede  the  other  without 

74 


DISTRIBUTIVE  75 

loss.  If  we  are  going  to  wait  for  distribution,  we  will  wait  for- 
ever, or  nearly  forever.  On  the  other  hand,  if  we  are  going  to 
create  a  demand  without  distribution — rather  if  we  are  going 
to  try  to  create  a  demand  without  distribution,  without  advertis- 
ing— then  again  we  are  going  to  delay  the  time  that  we  reach  the 
success  to  which  we  are  entitled.  In  other  words  the  most  eco- 
nomical, the  most  efficient  way,  in  my  opinion,  of  handling  this 
subject  of  distribution  and  demand  is  to  go  ahead  in  a  moderate 
way  and  advertise  and  take  the  sales  methods  that  are  at  hand 
and  keep  the  demand  going  by  getting  all  the  distribution  you 
can." 

A  recent  very  complete  investigation  conducted  by  the  Com- 
mercial Research  Division  of  the  Curtis  Publishing  Company 
seems  to  prove  that,  other  things  being  equal,  seventy-four  per 
cent  of  the  dealers  in  the  United  States  favor  carrying  advertised 
brands  over  unadvertised  brands.  Furthermore,  this  proportion 
seems  to  be  on  the  increase. 

\Yhen  a  new  concern  comes  into  the  field  or  a  brand  changes 
from  an  unadvertised  to  an  advertised  brand,  the  quantity  and 
the  quality  of  that  advertising  is  a  great  asset  in  increasing  its 
distribution  among  the  majority  of  dealers.  For  this  reason  the 
custom  of  advertising  one's  advertising  is  increasing.  Many 
advertisers  have  their  complete  campaigns  prepared  in  the  form 
of  portfolios  for  the  salesmen  to  carry  with  them  at  the  time  of 
the  dealer  season  just  preceding  the  consumer  season.  These 
portfolios  show  not  only  the  advertisements  themselves  and  the 
dates  they  are  scheduled  to  appear  but  the  circulation  of  the  dif- 
ferent media  in  each  dealer's  own  town.  Through  this  method 
the  distribution  is  often  increased  and  there  are  many  cases  of 
such  advertising  campaigns  having  thus  paid  for  themselves  be- 
fore a  single  advertisement  appeared. 


Hnterattg  of  m 

GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  III.    ANALYSIS  OF  THE  CHANNELS 
OF  DISTRIBUTION 

BY 
MAC  MARTIN 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  It).    FEBRUARY  1914 


Entered  at  the  Post-Office 

Minneapolis  as  second-class  matter 

Minneapolis,  Minn. 


of 


GENERAL  EXTENSION  DIVISION 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  III.    ANALYSIS  OF  THE  CHANNELS 
OF  DISTRIBUTION 

BY 
MAC  MARTIN 

PROFESSORIAL  LECTURER  IN  ADVERTISING,  PRESIDENT  MINNEAPOLIS 

ADVERTISING  FORUM,  MEMBER  EXECUTIVE  COMMITTEE 

ASSOCIATED  ADVERTISING  CLUBS  OF  AMERICA 


BULLETIN  OF  THE  UNIVERSITY  OF  MINNESOTA 
GENERAL  SERIES  NO.  10.    FEBRUARY  1914 


Entered  at  the  Post-Office 

Minneapolis  as  second-class  matter 

Minneapolis,  Minn. 


COPYRIGHT  1914 
THE  UNIVERSITY  OF  MINNESOTA 


PLANNING  AN  ADVERTISING  CAMPAIGN 
FOR  A  MANUFACTURER 

PART  III.     ANALYSIS  OF  THE  CHANNELS  OF 
DISTRIBUTION 

Each  member  of  the  class  has  chosen  a  product  with  which  he 
is  familiar  and  is  applying  the  experience  of  others  in  determin- 
ing the  most  profitable  policies  and  methods  of  procedure  in  sell- 
ing the  particular  product  or  group  of  products  which  he  has 
chosen. 

After  reading  the  comments  under  each  head  contained  in  the 
body  of  this  pamphlet  and  applying  this,  the  references,  and  his 
own  experiences  to  the  particular  case,  the  reader  is  expected  to 
answer  all  questions  which  apply  to  his  product,  to  make  mar- 
ginal and  interlinear  notes,  and  to  add  other  questions  and  refer- 
ences which  seem  to  apply. 

Name  of  Product  and  Present  Methods  of  Distributing 
(If  different  in  different  markets,  please  classify) 


77 


78  THE  CHANNELS  OF  DISTRIBUTION 

THE  FIVE  AGENCIES  OF  DISTRIBUTION  (p.  81)  — 

THE  FOUR  CHANNELS  OF  DISTRIBUTION  AND  THEIR  SUBDIVISIONS 
(p.  83)- 

Shaw,  A.  W.,  Quarterly  Journal  of  Economics,  August,  1912,  pp. 

703-65. 

Calkins  and  Holden,  Modern  Advertising,  Chapter  III. 
Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp.  29-67, 

119-27,  171-204,  210-56. 

A.  CONDITIONS  RELATING  TO  THE  PRODUCT — 

1.  Is  your  product  salable  by  description? 

by  sample? or  must  it  be  sold  in  bulk? 

pp.  85-86. 

2.  Is  there  an  element  of  shopping  in  your  product? 

pp.  86-87. 

3.  Does  selling  seem  to  require  especially  educated  salesmen? 

p.  87. 

4.  Is  the  product  of  such  a  nature  that  it  will  require  special 

attention  after  it  is  sold  in  order  to  keep  the  customer 

satisfied? pp.  87-89. 

5.  Can  a  retail  dealer  profitably  carry  a  full  line  of  more  than 

one  competing  brand  of  a  product  like  yours? 

pp.  89-90. 

B.  CONDITIONS  RELATING  TO  THE  MARKET — 

Curtis  Publishing  Co.,  Selling  Forces,  p.  134. 
1.  Have  satisfactory  available  depots  of  distribution  already 

been  established  in  this  territory? p.  91. 

Cherington,  Paul  Terry,  Advertising  as  a  Business  Force,  pp.  135-40. 


OUTLINE  79 

2.  Is  the  possible  demand  in  the  territory  sufficient  to  support 

profitably  a  separate  selling  organization? 

pp.  91-93. 

3.  Are  distributors  in  this  territory  accustomed  to  extend  long 

or  short  terms  of  credit? pp.  93-94. 

Bradstreet  Mercantile  Agency. 
R.  G.  Dun  &  Co. 

4.  Is  the  period  of  time  between  one  demand  and  the  next 

from  the  same  consumer  shorter or  longer 

than  the  period  of  time  required  for  the 

most   rapid  transportation  between  producer   and   con- 
sumer ? pp.  94-95. 

5.  Is  this  territory  near  enough  to  producer  so  that  transpor- 

tation charges  on  the  smallest  unit  demanded  will  not 

materially  affect  the  price  in  competition? 

pp.  95-96. 

C.     CONDITIONS  RELATING  TO  CLASSES  OF  DISTRIBUTION — 
Curtis  Publishing  Co.,  Selling  Forces,  pp.  103-33. 

1.  Which  group  of  distributors  comes  most  closely  in  contact 

with  consumers,   when  purchasing  competing  or  asso- 
ciated classes  of  goods? p.  98. 

2.  Which  group  can  distribute  your  product  most  rapidly? 

pp.  98-99. 

Mahin  Advertising  Data  Book,  1913-1914,  pp.  477-80. 


.  PART  III.    ANALYSIS  OF  THE  CHANNELS 
OF  DISTRIBUTION 

After  you  have  studied  the  product  which  you  wish  to  adver- 
tise and  the  markets  in  which  you  can  most  profitably  sell  this 
product,  your  next  great  question  is,  "How  can  I  most  profitably 
distribute  this  article  in  these  markets?"  Will  it  be  more  profit- 
able to  sell  direct  to  consumers  through  your  own  organization 
either  by  mail  or  by  sales  agents;  will  it  be  more  profitable  to 
sell  direct  to  all  dealers,  or  to  but  one  dealer  in  a  town,  eliminat- 
ing entirely  the  middlemen ;  or  is  your  proposition  of  such  a 
nature  that  your  most  profitable  channel  of  reaching  the  con- 
sumer is  through  wholesalers  to  dealers  to  consumers  ? 

Mr.  A.  W.  Shaw,  president  of  the  System  Company  and 
organizer  of  the  Department  of  Business  Research  of  Harvard 
University,  asserts  that  the  greatest  problem  of  modern  business 
is  the  problem  of  distribution.  During  the  last  half  century 
many  of  the  problems  of  production  have  been  solved.  Mr. 
Shaw  says,  "Methods  of  study  that  have  proven  successful  in 
other  fields  have  been  applied  to  the  problems  of  manufacture  and 
a  body  of  organized  knowledge  is  being  built  up. 

"The  problems  of  market  conditions  are  no  less  worthy  of 
systematic  study  than  are  the  problems  of  factory  production. 
As  yet  there  has  hardly  been  an  attempt  even  to  bring  together, 
describe,  and  correlate  the  facts  concerning  commercial  distribu- 
tion." 

The  writer  has  been  searching  for  years  for  some  book  or 
magazine  article  dealing  with  the  reasons  why  certain  concerns 
choose  certain  channels  of  distribution.  System  and  Printers' 
Ink  have  published  some  very  helpful  articles  on  such  subjects 
as  the  advantages  and  disadvantages  of  chain  stores.  We  have 
been  told  by  others  of  the  great  fortunes  that  await  any  one  con- 
ducting a  mail  order  business  until  we  might  be  led  to  think  that 
anything  can  be  sold  anywhere  by  mail.  We  have  been  told  that 
advertising  tends  to  eliminate  the  middleman;  and  to  an  extent 

80 


FIVE  AGEXCIES  OF  DISTRIBUTION  81 

this  is  true.  Yet  some  of  the  greatest  and  most  successful  adver- 
tisers are  still  selling  through  middlemen. 

When  can  he  be  eliminated  and  when  can  he  not? 

About  fifteen  years  ago  the  manufacturer  of  heating  plants 
"had  a  hunch"  that  he  could  sell  to  consumers  direct  by  mail.  His 
advertising  agent  doubted  the  practicability  of  the  plan.  The 
"hunch"'  proved  sound,  however,  and  a  big  business  has  been 
built  up.  To  carry  out  the  plan,  however,  it  is  necessary  to 
extend  very  long  terms  of  credit  so  that  while  the  business  is 
growing  steadily  it  is  not  able  to  grow  as  fast  as  it  might  if 
it  were  not  extending  such  credits  and  perhaps  not  as  fast  as  it 
would  have  if  it  had  sold  through  dealers  who  might  have  taken 
part  of  the  financial  burden  and  the  responsibility  of  accounts. 

About  25  years  ago  three  poor  men  were  convinced  that  they 
could  sell  merchandise  more  profitably  by  catalogue  without  sales- 
men direct  to  dealers.  The  result  \vas  the  great  concern  of 
Butler  Brothers,  with  enormous  warehouses  in  different  parts  of 
the  country  and  an  annual  business  running  into  the  millions. 
Yet  the  same  merchandise  is  sold  by  others  through  salesmen. 

Most  manufacturers  of  breakfast  foods  employ  salesmen  and 
have  large  sales  forces,  yet  the  Cream  of  Wheat  Company  has 
never  had  but  one  salesman  and,  as  Colonel  Mapes  says,  "he  only 
lasted  for  a  few  fruitless  months." 

The  channels  of  distribution  are  constantly  changing.  The 
same  concern  is  often  found  using  different  channels  in  different 
markets. 

A  few  concerns  seem  to  be  able  to  sell  successfully  through 
more  than  one  channel  in  the  same  territory. 

The  Baltimore  Bargain  house,  for  example,  a  concern  doing 
an  annual  business  of  over  $16,000,000  sells  to  dealers  in  small 
towns,  sells  by  mail  direct  to  consumers  in  the  country,  and  also 
conducts  a  large  retail  store  in  Baltimore. 

THE  FIVE  AGENCIES  OF  DISTRIBUTION 

There  may  be  as  many  as  five  links  in  the  chain  of  selling  or 
five  stopping  places  for  the  channels  of  distribution.  They  are  as 
follows : 

1.  The  manufacturer  or  producer. 


82  THE  CHANNELS  OF  DISTRIBUTION 

2.  The  importer,  broker,  or  sales  agent,  a  person  who  usually 
contracts  for  the  entire  output  of  a  plant  or  the  entire  distribu- 
tion in  a  specified  country  or  territory.     He  may,  or  he  may  not, 
be  a  part  of  the  manufacturer's  organization.     He  sells  to  the 
next  one  in  the  chain. 

3.  The  wholesaler  or  jobber.     The  same  concern  often  "jobs" 
some  lines  and  manufactures  others.     If  the  jobber  is  a  part  of 
the  manufacturer's  organization  he  is  called  a  territorial  repre- 
sentative or  agent.     He  sells  to  the  dealer. 

4.  The  dealer  or  retailer.     He  also  may  be  a  part  of  the  man- 
ufacturer's organization.     He  is  the  last  link  between  the  manu- 
facturer and  the  consumer. 

5.  The  consumer. 


THE  FOUR  CHAXXELS  OF  DISTRIBUTION  AXD 
THEIR  SUBDIVISIONS 

So  far  the  business  world  has  developed  four  main  channels 
of  distribution.  These  may  be  again  subdivided,  giving  a  choice 
of  ten  different  ways  of  delivering  goods  to  consumers. 

1.  From  producer  to  consumer 

a.  By  mail.     (This  class  does  not  include  what  is  known  as 

the  "mail  order  houses,"  as  the  larger  proportion  of 
such  goods  is  manufactured  by  others.) 

b.  By  salesmen  or  canvassers 

2.  From  producer  to  retailer  to  consumer 

(This  channel   is   apparently   growing  more   popular   and 
therefore  exhibits  more  subdivisions.) 

a.  Through  unrestricted  sale  to  retailers 

b.  Through  sale  to  exclusive  retail  stores 

c.  Through  retail  stores  owned  by  the  manufacturer 

(This  plan  was  first  introducted  in  the  shoe  business. 
It  has  many  variations.  The  plan  is  often  reversed, 
the  manufacturing  plants  being  owned  by  retailers. 
The  Rexall  Stores,  a  combination  of  druggists  who 
•  own  the  manufacturing  plants  making  certain  prod- 
ucts, is  an  example.) 

d.  Through  sale  to  mail  order  houses  or  other  consignment 

agencies 

(This  channel  excludes  advertising  by  manufacturers 
as  the  entire  output  is  usually  sold  to  one  or  more 
houses  and  is  seldom  trade  marked  by  the  manufac- 
turers.) 

3.  From  producer  to  wholesaler  to  retailer  to  consumer 

a.  Through  any  wholesaler  and  through  any  retailer 
(This  is  the  most  used  channel  of  this  class.) 


84  THE   CHANNELS  OF  DISTRIBUTION 

b.  Through  producer's  oivn  territorial  agents  to  any  retailer 

(In  some  territories  a  producer  finds  a  sufficient  de- 
mand for  his  goods  to  justify  him  in  establishing  a 
part  of  his  own  organization  in  that  territory  to  take 
the  place  of  a  wholesaler.) 

c.  Through  producer's  own  territorial  agents  to  exclusive 

retailers 

(This  is  simply  a  case  of  where  the  producer's  agent 
acts  as  wholesaler  but  where  it  is  deemed  advisable 
(as  in  2  b)  to  establish  but  one  retail  outlet  in  a  com- 
munity. An  example  of  this  class  is  the  Sherwin- 
Williams  Paint  Company.) 

4.  From  producer  to  selling-agent,  importer,  broker,  or  commis- 
sion agent  to  wholesaler  to  retailer  to  consumer 

You  may  find  as  many  variations  as  the  sands  of  the  sea,  but  I 
think  you  will  find  in  every  case  that  a  little  analysis  will  place  any 
particular  method  in  one  of  these  ten  classes. 

Of  late  there  has  been  a  great  revival  of  what  is  known  as 
Buying  Clubs.  This  is  .especially  true  in  the  drug  business. 
Sometimes  these  represent  dealers  getting  together  and  acting  as 
their  own  wholesaler.  Other  times  these  represent  consumers 
clubbing  together  and  apparently  acting  as  their  own  dealer. 

As  has  been  said  above,  a  choice  of  the  most  profitable  chan- 
nel varies  with  the  conditions  of  a  market  as  well  as  those  of  the 
article  itself. 

The  following  are  a  few  of  the  questions  which  have  guided 
manufacturers  in  choosing  the  different  channels.  These  are  not 
all  of  the  questions,  but  these  are  sufficient  to  uncover  in  many 
businesses  a  multitude  of  sins. 


A.     CONDITIONS  RELATING  TO  THE  PRODUCT 

1.  Is  your  product  salable  by  description,  by  sample,  or  must  it 
be  sold  in  bulk? 

You  immediately  eliminate  the  possibility  of  selling  by  mail  if 
your  article  is  of  such  a  nature  that  it  can  not  be  sold  by  descrip- 
tion. You  may  be  able  to  sell  through  peddlers  if  your  article  is 
of  small  size,  but  the  very  fact  that  your  article  is  not  amenable 
to  sale  by  description  puts  you  out  of  the  field  of  advertising 
except  as  you  may  be  able  to  send  samples  to  distributing  points. 
The  first  great  effort  of  modern  advertising  has  been  to  put  mer- 
chandise in  such  form  that  it  may  be  sold  by  description  or  by 
sample  and  called  for  by  a  name.  Nowadays  there  are  very  few 
articles  still  sold  in  bulk.  During  the  last  few  years  special 
brands  of  sugar,  salt,  vinegar,  oysters,  and  such  articles  which 
the  world  thought  impossible  to  sell  except  in  bulk  have  been 
harnessed  by  ingenious  trade-marking  devices  and  are  sold  to-day 
by  description. 

A  sample  assists  any  sale  and  a  combination  of  description 
and  samples  is  usually  considered  a  better  method  than  descrip- 
tions alone.  The  National  Biscuit  Company  attempts  to  intro- 
duce its  goods  by  description  alone.  The  Loose-Wiles  Biscuit 
Company  employs  a  combination  of  description  (general  adver- 
tising) and  sampling.  It  has  been  said  fchat  the  Loose- Wiles 
Biscuit  Company  makes  sales  at  a  lower  cost  per  package  than 
the  National  Biscuit  Company. 

It  is  hard  for  the  imagination  to  grasp  a  new  taste,  a  new 
odor,  or  a  new  harmony  of  sounds.  Through  a  picture,  how- 
ever, the  imagination  can  conceive  anything  which  exhibits  itself 
purely  through  the  sense  of  sight.  Each  year  for  a  number  of 
years  the  manufacturer  of  a  certain  wall  board  sent  out  through 
the  mail  100,000  samples  of  his  product  to  contractors  and  build- 
ers. He  did  a  nice  business  but  the  selling  expense  was  enor- 
mous. One  day  an  advertising  man  persuaded  him  to  try  to  sell 
his  product  by  description  alone,  reserving  the  sample  only  for 
those  who  requested  it.  It  was  found  that  in  less  than  ten  per 
cent  of  the  new  sales  was  the  sample  necessary. 

85 


86  THE  CHANNELS  OF  DISTRIBUTION 

But  we  are  not  here  discussing  the  advantages  or  disadvan- 
tages of  the  sample.  We  are  trying  to  determine  the  most 
profitable  channel  of  distribution  for  your  product. 

If  you  must  sell  by  bulk  or  by  sample,  you  must  have  distribu- 
tion centers  in  each  territory  where  samples  of  the  article  can  be 
shown  or  distribution  can  be  made  in  bulk. 

If  you  can  sell  by  description,  every  channel  may  be  open  to 
you. 

2.  Is  there  an  element  of  "shopping"  in  your  product? 

If  your  product  is  a  staple  such  as  a  breakfast  food,  a  medi- 
cine, or  a  toilet  article  which  consumers  are  accustomed  to  order 
at  the  nearest  store,  you  may  lose  many  sales  if  you  do  not  have 
a  thorough  distribution.  On  the  other  hand,  if  the  article  is  one 
for  which  consumers  are  accustomed  "to  shop"  you  may  be  able 
to  establish  but  one  agency  or  distributor  in  a  community  and 
still  obtain  your  share  of  the  trade. 

Here  we  see  the  advantage  of  having  already  determined 
whether  your  article  is  most  often  purchased  by  men  or  by  women. 
Men  shop  for  a  few  high-priced  articles  such  as  automobiles. 
Women  shop  for  many  things.  For  this  reason  it  is  more  often 
found  safer  to  establish  exclusive  agencies  for  goods  sold  to 
women  than  for  goods  sold  to  men. 

A  man  will  not  take  the  trouble,  unless  the  article  is  a  high- 
priced  one,  to  go  out  of  his  way  for  it.  A  woman  will  take  more 
time  to  find  you.  She  "loves  to  shop."  The  higher  the  price, 
and  the  less  of  "repeat"  there  is  in  an  article,  the  greater  the 
"shopping"  element. 

The  purchase  of  a  suit  of  clothes  involves  a  sufficient  amount 
of  money  to  suggest  shopping,  yet  as  clothing  has  a  steady  ele- 
ment of  repeat  as  soon  as  a  clothing  store  or  a  tailor  has  once 
satisfied  a  man,  we  find  him  doing  very  little  shopping  as  com- 
pared to  his  habits  in  purchasing  other  articles  of  the  same  price 
but  with  less  of  the  element  of  repeat.  On  the  other  hand,  even 
if  a  woman  buys  her  suits  from  the  same  establishment  year  after 
year,  she  is  said  always  to  "want  to  do  a  little  shopping  first.0 
(The  principal  reason  manufacturers  of  clothing  establish  exclu- 
sive agencies  will  be  taken  up  in  another  division,  AS.). 

If  your  product  possesses  the  element  of   shopping,   every 


CONDITIONS  RELATING  TO  THE  PRODUCT  87 

channel  may  be  open  for  you,  but  if  it  does  not  possess  this  ele- 
ment, it  will  probably  be  inadvisable  to  sell  through  but  one  dis- 
tributor in  a  community. 

3.  Does  selling  seem  to  require  especially  educated  salesmen? 

Every  time  a  sales  story  is  told  it  loses  some  in  the  telling. 
The  jobber  may  handle  one  thousand  different  products.  His 
salesmen  can  not  be  expected  to  remember  the  particular  sales 
talk  for  each. 

To  sell  life  insurance  you  must  have  your  own  organization 
from  start  to  finish.  You  may  for  convenience  have  territorial 
agents  but  it  must  be  your  own  organization,  and  the  salesmen  to 
be  successful  must  devote  their  entire  time  to  the  sale  of  that  one 
thing. 

Advertising  is,  however,  fast  making  its  inroads  on  the  classes 
of  business  which  require  especially  educated  salesmen. 

It  is  becoming  more  and  more  possible  to  let  literature  do  all 
of  the  preliminary  part  of  the  sale,  leaving  only  the  closing  to 
the  salesman. 

The  National  Cash  Register  is  an  example  of  a  product  which 
evidently  requires  especially  educated  salesmen. 

It  would  probably  be  much  more  economical  to  distribute 
Cash  Registers  through  department  stores  or  by  mail,  but  prob- 
ably not  one-tenth  of  the  present  business  would  be  obtained  if 
Cash  Registers  were  sold  in  this  way. 

Others  have  found  that  if  an  article  requires  especially  edu- 
cated salemen  there  are  but  two  natural  channels  open,  selling 
direct  to  consumers  through  producer's  own  salesmen  (la),  or 
through  retail  stores  owned  by  the  manufacturer  (2c).  There 
is  a  possibility,  however,  by  giving  exclusive  sale  to  one  concern 
in  a  town  and  in  turn  securing  an  exclusive  understanding  from 
that  concern,  to  selling  through  two  other  channels,  from  pro- 
ducer to  exclusive  retail  stores,  to  consumer  (2b)  and  through 
producer's  own  territorial  agents  to  exclusive  retailers  (3c). 

4.  Is  the  product  of  such  a  nature  that  it  will  require  special  atten- 

tion after  it  is  sold  in  order  to  keep  the  customer  satisfied? 

This  is  a  very  important  question  in  the  sale  of  machines  or, 
mechanical  devices  of  every  kind.  Many  mechanical  devices  are 


88  THE  CHANNELS  OF  DISTRIBUTION 

used  by  those  who  are  not  at  all  mechanical.  If  my  typewriter 
gets  out  of  order,  I  telephone  the  Underwood  agent.  The  trouble 
may  be  a  very  simple  one  and  one  which  will  take  but  a  moment 
to  correct,  but  the  longer  my  machine  is  out  of  order  the  more 
impatient  I  shall  probably  get.  If  I  had  to  take  my  typewriter  to 
a  hardware  dealer  and  he  in  turn  had  to  send  it  to  a  jobber  and 
the  jobber  in  turn  had  to  send  it  to  the  manufacturer  before  it 
could  be  fixed,  I  might  in  the  meantime  listen  very  attentively  to 
the  salesman  for  the  Remington  or  the  L.  C.  Smith. 

But  the  Underwood  people  take  no  such  chances.  They  not 
only  have  their  own  representatives  within  easy  call  but  they  send 
a  representative  to  my  office  once  each  six  months  to  inquire  if 
there  is  anything  the  matter  with  my  machine.  He  called  only  a 
couple  of  months  ago.  Then,  and  not  till  then,  I  remembered 
that  for  the  last  few  weeks  the  alignment  had  not  been  as  per- 
fect as  I  wished.  The  result  of  it  all  was  that  I  bought  a  new 
machine.  If  I  had  bought  my  typewriters  of  the  Warner  Hard- 
ware Company  I  probably  should  not  have  bought  a  new  one  so 
soon  but  would  have  waited  until  the  Underwood  was  completely 
out  of  order.  Then,  when  I  finally  did  decide  to  buy,  I  probably 
should  have  asked  to  see  another  make  of  typewriter,  having 
seemingly  had  unsatisfactory  experience  with  the  Underwood. 

Each  year  the  Burroughs  Adding  Machine  Company  sends  a 
letter  to  everyone  who  has  ever  purchased  a  Burroughs  asking 
about  its  condition  at  the  present  time  and  whether  or  not  the 
person  is  still  using  it  or  another  Burroughs.  While  the  great 
cost  of  this  work  is  said  to  pay  for  itself  in  new  machines  sold, 
the  company  considers  this  effort  as  insurance  against  displeased 
customers.  Without  its  own  organization  through  every  step  of 
distribution  (or  at  least  without  exclusive  agencies),  this  could 
hardly  be  accomplished. 

Last  year  it  was  rumored  that  the  Ford  Motor  Car  Company 
planned  to  sell  Ford  Automobiles  for  $333  and  that  this  was  to 
be  done  by  discontinuing  the  Ford  agencies  and  selling  entirely 
by  mail.  This  rumor  presented  a  very  interesting  problem. 
Ford  has  cut  many  Gordian  knots  of  manufacture.  Would  he 
have  been  aEle  to  accomplish  this  feat  in  distribution  ? 

Apply  to  this  problem  the  questions  which  we  are  now  dis- 
cussing. You  will  probably  find  that  the  question  of  the  atten- 


CONDITIONS  RELATING  TO  THE  PRODUCT  89 

tion  each  car  should  receive  after  it  is  sold  would  have  been  the 
most  dangerous  stumbling  block. 

Others  have  found  that  a  positive  answer  to  this  question 
leaves  but  three  channels  of  distribution  open  to  them  :  from 
producer  to  consumer  through  producer's  own  salemen  (1  a), 
through  exclusive  retail  distributors  (2b),  or  through  stores 
owned  by  manufacturers  (2c). 

5.  Can  a  retail  dealer  profitably  carry  a  full  line  of  more  than  one 
competing  brand  of  a  product  like  yours? 

To  my  question,  "why  do  you  sell  your  goods  to  but  one  dealer 
in  a  town?''  a  leading  national  advertiser  replies,  "There  is  but 
one  answer  to  that  question.  It  is  not  a  question  of  the  size  of 
the  town  or  of  the  nature  of  our  competition.  It  is  because  one 
dealer  can  not  afford  to  carry  a  full  line  of  our  goods  and  a  full 
line  of  a  competitor  as  well.  It  is  to  our  advantage  as  well  as 
his  for  him  to  carry  a  full  line.  We  can  not  expect  him  to  sell 
our  line  to  the  exclusion  of  all  others  unless  we  sell  to  him  to  the 
exclusion  of  all  others." 

This  is  also  the  primary  reason  given  by  W.  L.  Douglas  for 
the  establishing  of  his  chain  of  retail  shoe-stores.  The  chains  of 
shoe-stores  established  by  manufacturers  have  often  been  pointed 
to  as  examples  of  the  enormous  profits  to  be  obtained  by  manu- 
facturers, eliminating  both  the  middlemen  and  the  dealers,  but 
the  man  who  first  introduced  this  system  staunchly  asserts  that 
the  matter  of  profits  does  not  have  nearly  as  much  to  do  with  the 
question  as  the  inability  under  the  old  system  to  get  the  entire 
line  properly  distributed. 

This  condition  more  often  occurs  in  businesses  dealing  in 
wearing  apparel  where  many  sizes  must  be  carried.  The  condi- 
tion differs  with  the  size  of  the  territory  covered  by  each  dealer. 
While  the  manufacturer  who  grants  exclusive  agencies  or  estab- 
lishes his  own  stores  is  said  to  gain  much  in  the  cooperation 
of  the  dealers,  he  of  course  greatly  restricts  his  number  of  dis- 
tributing outlets.  Dunlap  hats  and  Knox  hats  are  sold  through 
exclusive  agencies  only.  Stetson  hats  are  not  sold  under  the 
exclusive  plan.  George  A.  Weinman,  sales  and  advertising  man- 
ager of  Lord  &  Taylor,  handling  the  well-known  Onyx  hosiery 
and  Onyx  underwear,  believes  that  it  is  never  advisable  to  con- 


90  THE  CHANNELS  OF  DISTRIBUTION 

fine  the  sale  of  a  brand  like  Onyx  to  a  single  store  except  in 
towns  where  conditions  practically  eliminate  competitive  selling. 
In  an  ably  written  article,  by  S.  Roland  Hall  in  Printers'  Ink  of 
September  4,  1913,  Mr.  Weinman  is  quoted  as  saying,  "A  popular 
product,  such  as  hosiery  or  underwear,  in  general  use  by  the 
public,  should  never  be  confined.  As  a  matter  of  fact  the  busi- 
ness of  any  concern  attempting  to  do  this  would  eventually  dry 
up." 

In  spite  of  this  strong  prophecy  by  one  of  authority,  the  North- 
western Knitting  Company  adheres  strictly  to  the  exclusive 
agency  plan  and  is  said  to  manufacture  more  standard  underwear 
than  any  other  concern  in  the  world. 

Edward  Freschl,  president  of  the  Holeproof  Hosiery  Com- 
pany, says  that  there  are  so  many  different  phases  of  the  subject 
of  exclusive  agencies  that  "even  now  we  have  no  set  policy  in 
regard  to  the  'one  dealer'  or  'open  town'  problem ;  we  try  to  use 
our  judgment  when  occasions  present  themselves." 

It  would  seem,  however,  to  the  writer  from  his  experience  and 
the  more  valuable  experience  of  others  from  which  he  has  been 
able  to  draw,  that,  if  you  are  forced  to  answer  the  above  ques- 
tion in  the  negative,  your  most  profitable  distribution  will  be 
found  in  selecting  but  one  distributor  or  agent  in  each  commun- 
ity. By  one  distributor  in  a  community  I  do  not  necessarily 
mean  but  one  dealer  in  a  city.  The  extent  of  the  community 
served  depends  upon  the  nature  of  the  article.  Whitman's  Choc- 
olates are  carried  by  but  one  dealer  in  cities  of  15,000  or  under, 
but  in  New  York  are  sold  in  adjoining  blocks.  In  New  York 
candy  can  hardly  be  considered  as  a  "shoppable"  article,  yet  one 
dealer  can  not  profitably  carry  a  complete  line  of  a  number  of 
trade-marked  brands. 


B.     CONDITIONS  RELATING  TO  THE  MARKET 

As  was  said  in  the  beginning  of  this  chapter  the  same  concern 
may  use  different  channels  of  distribution  in  different  markets. 
Sometimes  a  very  little  thing  determines  the  difference.  Often 
it  is  the  condition  of  the  market  itself.  Other  times  it  seems  to 
be  the  amount  of  business  one  particular  jobber  or  dealer  seems 
able  to  deliver. 

1.  Have  satisfactory  available  depots  of  distribution  already  been 

established  in  this  territory? 

A  successful  manufacturer  to  whom  I  put  the  question,  "what 
channels  of  distribution  do  you  employ?"  replied,  "We  usually 
sell  through  our  own  territorial  agents  direct  to  dealers.  In 
Pittsburg  we  sell  through  jobbers,  but  our  own  territorial  agents 
cover  the  territory,  take  orders,  and  turn  them  over  to  jobbers 
who  in  turn  order  from  us.  In  Davenport,  Iowa,  there  is  a 
jobber  who  handles  one  line  so  satisfactorily  that  we  would  not 
only  not  think  of  supplanting  him  with  a  territorial  agent  from 
our  own  organization  but  we  do  not  even  send  special  salesmen 
into  his  territory." 

It  has  often  been  said  that  the  channels  of  distribution  are 
decided  entirely  by  custom.  One  channel  is  chosen  for  a  particu- 
lar product  and  all  competitors  in  that  line  follow  suit.  The  very 
complicity  of  the  system  would  tend  to  argue  against  this  conten- 
tion. Nevertheless  it  is  only  natural  to  ask,  as  the  very  first 
question  in  determining  your  channels  of  distribution,  whether 
or  not  the  stopping  places  have  not  already  been  prepared  for 
you. 

If  your  article  is  any  one  of  the  principal  branches,  such  as 
groceries,  drugs,  hardware,  millinery,  shoes,  clothing,  haber- 
dashery, or  paper,  you  will  find  powerful  channels  of  distribution 
already  established.  Your  problem  then  becomes  one  of  choos- 
ing the  most  profitable  individual  distributors. 

2.  Is  the  possible  demand  in  the  territory  sufficient  to  support 

profitably  a  separate  selling  organization? 

Mr.  Lamson,  secretary  of  Dunlap  &  Company,  in  the  Printers' 
Ink  article  above  quoted,  says,  "We  conduct  our  business  strictly 

91 


92  THE  CHANNELS  OF  DISTRIBUTION 

on  the  agency  plan,  dealing  with  only  one  representative  in  each 
city  except  in  New  York,  Chicago,  and  Philadelphia,  where  stores 
are  operated  under  our  own  management,  but  there  is,  we  believe, 
no  other  point  at  which  a  store  could  be  profitably  maintained." 

When  I  asked  Mr.  George  W.  Hopkins,  special  sales  and 
advertising  manager  of  the  Loose-Wiles  Biscuit  Company,  how 
his  company  "scattered  Sunshine,"  he  replied,  "We  sell  direct  to 
grocers  in  all  territories  except  those  in  which  credit  conditions 
make  that  policy  ill-advised  or  in  those  where  the  possible  demand 
is  not  sufficient  to  support  profitably  a  separate  selling  organiza- 
tion/' 

If  the  jobbing  or  the  retail  territory  will  not  profitably  support 
a  separate  selling  organization,  you  are  certainly  shut  out  for  the 
present  from  channels  1  b,  2  c,  3  b,  and  3  c, — selling  direct  by 
salesmen,  selling  through  your  own  retail  stores,  and  selling 
through  your  own  territorial  agents.  How  soon  you  will  be 
able  to  reach  the  territory  with  your  own  selling  organization 
depends  of  course  upon  the  possible  consumers,  the  competition, 
and  the  power  of  your  advertising. 

Most  successful  breakfast  foods  were  first  sold  through 
merchandising  brokers  to  jobbers  to  dealer  to  consumers.  This 
is  usually  found  the  most  economical  method  to  distribute  a  food 
product  of  general  consumption.  All  of  these  companies  (with 
the  exception  of  the  Cream  of  Wheat  Company)  employed  sales- 
men to  call  on  dealers  and  often  employed  saleswomen  to  call 
upon  and  to  leave  samples  with  consumers.  The  salesmen  who 
called  upon  dealers  were  often  good  window  trimmers  and  the 
sample  distributors  often  conducted  demonstrations  in  dealers' 
stores.  But  when  orders  were  booked  from  consumers,  they 
were  turned  over  to  dealers  to  fill.  When  orders  were  booked 
from  dealers,  they  were  turned  over  to  jobbers  and  the  jobbers  in 
turn  ordered  from  the  merchandising  brokers.  The  salesmen 
seldom  called  on  the  jobbers.  Gradually  as  the  volume  of  busi- 
ness in  each  territory  increased  it  was  found  possible  to  establish 
a  territorial  office  and  to  dispense  with  the  merchandising  broker 
in  that  territory.  I  understand  that  only  recently  Kellogg  did 
away  with  his  last  merchandising  broker,  but  that  in  no  terri- 
tory does  a  breakfast  food  company  attempt  to  perform  the 
function  of  a  jobber.  The  reason  for  this  can  be  readily  under- 


CONDITIONS  RELATING  TO   THE  MARKET  93 

stood  when  it  is  realized  that  in  the  Twin  Cities  alone  there  are 
18  grocery  jobbers  and  over  1,300  established  grocery  stores 
beside  about  500  other  constantly  changing  little  dairy  or  candy 
supply  stores  which  usually  handle  breakfast  foods  and  must 
be  sold  on  time. 

3.  Are  distributors  in  this  territory  accustomed  to  extend  long 
or  short  terms  of  credit? 

The  five  functions  of  the  middleman  as  given  by  A.  W.  Shaw 
are  (1)  sharing  the  risk ;  (2)  transporting  the  goods ;  (3)  financ- 
ing the  operations;  (4)  selling  (communication  of  ideas  about 
the  goods)  ;  (5)  assembling,  assorting,  and  reshipping. 

In  some  territories  the  share  of  the  risk  and  the  amount  of 
credit  extended  by  the  middlemen  is  a  great  item.  The  credits 
of  different  sections  of  this  country  seem  to  be  built  on  certain 
crops.  In  the  north  it  is  wheat.  In  the  central  states  it  is  corn, 
and  in  the  south  it  is  cotton.  Up  to  the  days  of  the  cotton-boll 
weevil  (1910),  cotton  was  considered  a  sufficiently  sure  crop  to 
"bank  on."  It  is  still  the  custom  in  the  cotton  country  for  dealers 
to  carry  consumers  and  for  jobbers  to  carry  dealers  from  one 
cotton  crop  to  the  next.  As  the  expense  for  collecting  is  usually 
less  for  local  distributors  than  it  is  for  large  organizations  situ- 
ated at  a  distance,  local  jobbers  and  local  dealers  can  afford  to 
extend  more  liberal  credits  than  could  a  manufacturer  situated 
at  a  distance.  It  is  said  that  there  is  no  habit  which  is  so  hard 
to  change  as  the  habit  of  asking  credit.  In  the  matter  of  credits, 
manufacturers  seem  unable  to  compete  with  local  distributors. 

Great  organizations  with  plenty  of  capital  find  it  advisable 
to  change  their  regular  methods  of  distribution  to  avoid  the 
extending  of  long  terms  of  credit  with  its  attendant  risks. 

In  the  textile  industry  in  New  England  the  sales  agent  is 
said  to  be  as  much  a  banker  for  the  manufacturer  as  he  is  a 
distributing  agent.  The  sales  agent  not  only  takes  the  goods  off 
the  hands  of  the  manufacturer  as  soon  as  they  are  produced  but 
endorses  his  commercial  paper  while  the  articles  are  in  process 
of  manufacture. 

From  the  standpoint  of  advertising  this  is  a  very  unhealthful 
condition.  The  greater  the  number  of  middlemen  and  the  more 
the  middleman  takes  on  the  functions  of  the  banker  the  less 


94  THE  CHANNELS  OF  DISTRIBUTION 

attention  he  seems  to  give  to  the  functions  of  selling,  the  less 
incentive  there  is  for  quality,  the  less  is  the  producer  held 
responsible  for  his  product,  and  the  less  justification  has  he  for 
advertising. 

The  new  monetary  law  basing  the  currency  of  the  country 
on  commercial  paper  may  make  it  possible  for  the  banks  to 
assume  more  of  the  risk  in  a  proper  and  legitimate  manner.  This 
will  also  probably  result  in  shifting  the  channels  of  distribution 
in  many  lines  of  business. 

Cash-with-order  mail  order  houses  have  been  known  to  make 
some  headway  in  territories  where  long  terms  of  credit  are 
extended  but  well-equipped  agencies  as  a  part  of  the  manufac- 
turers' own  organizations  have  often  found  it  impossible  to  com- 
pete under  such  conditions. 

If  long  terms  of  credit  are  customary  in  a  territory,  you  may 
find  it  very  difficult  to  distribute  your  goods  except  through 
jobbers  and  sales  agents. 

4.  Is  the  period  of  time  between  one  demand  and  the  next  from 
the  same  consumer  shorter  or  longer  than  the  period  of  time 
required  for  the  most  rapid  transportation  between  pro- 
ducer and  consumer? 

The  primary  function  of  both  the  wholesaler  and  the  dealer 
is  that  of  keeping  a  sufficient  supply  of  the  goods  on  hand  to 
satisfy  the  demand  of  the  dealers  and  consumers  whenever  that 
demand  may  arise. 

Most  of  us  seem  to  live  from  hand  to  mouth  as  far  as  buying 
is  concerned.  I  find  that  I  wait  until  I  feel  that  I  need  a  new 
suit  of  clothes  and  then  if  my  tailor  has  not  prepared  for  my 
demand  in  advance  to  the  extent  of  having  on  hand  exactly  the 
fabric  which  satisfies  me,  I  feel  shabbily  taken  care  of.  I  have 
sometimes  been  persuaded  to  wait  for  a  particular  piece  of  goods 
to  come  from  the  wholesaler.  But  such  cases  are  rare. 

Most  families  buy  their  provisions  from  day  to  day.  Many 
classes  of  provision  would  spoil  if  a  week's  or  a  month's  supply 
was  bought  in  advance.  When  a  very  low  price  is  offered  as 
an  inducement,  my  wife  can  be  persuaded  to  buy  laundry  soap 
by  the  box,  but  soap  is  about  the  only  household  commodity  I 
can  think  of  at  the  present  moment  which  is  bought  in  this  way. 


CONDITIONS  RELATING  TO   THE  MARKET  95 

Most  of  us  ''want  what  we  want  when  we  want  it."  That  is 
the  reason  for  the  corner  grocery,  the  corner  drug-store,  and  the 
corner  meat-market. 

We  hear  of  exceptions,  where  a  superior  quality  of  eggs, 
of  apples,  and  of  grape  fruit  is  sold  by  mail  and  of  course  the 
further  the  consumer  is  from  the  distributing  center,  the  more 
inclined  he  may  be  to  purchase  stores  of  provisions  in  advance, 
but  there  are  some  goods  such  as  fresh  meats  and  fresh  vege- 
tables which  by  their  very  nature  can  not  be  sold  at  any  distance 
by  mail. 

As  transportation  facilities  improve,  the  size  of  the  stocks 
which  Jobbers  and  dealers  find  it  necessary  to  carry,  rapidly 
diminishes.  The  introduction  of  the  parcel  post  has  already 
changed  the  channels  of  distribution  for  many  businesses.  Of 
late  years,  jobbers  seem  to  be  ordering  in  smaller  and  smaller 
lots.  Articles  which  a  few  years  ago  were  ordered  in  ten  gross 
lots  are  now  ordered  by  the  gross  and  gross  lot  orders  are  now 
reaching  dozen  lots.  As  transportation  is  improved,  this  develop- 
ment will  probably  increase.  Orders  will  be  more  frequent  but 
of  smaller  size.  For  this  reason  most  manufacturers  assume  the 
function  of  jobber  and  sometimes  of  dealer  also  in  their  local 
territory.  Even  when  selling  is  attempted  through  jobbers,  it 
is  found  that  jobbers  will  not  carry  a  stock  of  local  goods  but 
buy  only  when  they  need  it,  realizing  full  well  that  a  telephone 
call  will  bring  the  goods  in  dozen  lots. 

5.  Is  this  territory  near  enough  to  producer  so  that  transporta- 
tion charges  on  the  smallest  unit  demanded  will  not  mate- 
rially affect  the  price  in  competition? 

There  are  many  articles  now  shipped  to  jobbers  by  freight 
in  carload  lots  which,  if  shipped  one  at  a  time  to  consumers  or 
in  case  lots  to  dealers,  would  have  to  be  sold  at  a  price  which 
would  be  absolutely  prohibitive.  The  price  of  any  commodity 
is  affected  by  transportation  charges.  It  makes  no  difference 
whether  the  price  to  the  consumer  is  with  or  without  transporta- 
tion charges,  the  consumer  ultimately  pays  his  share  of  these 
charges.  Jones  may  pay  the  freight,  but  you  pay  Jones.  To 
equalize  such  transportation  charges,  mail  order  houses  encour- 
age large  orders  or  buying  clubs. 


96  THE  CHANNELS  OF  DISTRIBUTION 

You  may  find  some  territories  in  which  you  can  not  success- 
fully sell  in  competition  in  less  than  carload  lots.  In  others  you 
may  be  able  to  sell  in  case  lots.  In  others  the  transportation 
charges  in  handling  a  single  unit  will  not  materially  affect  the 
price.  The  question  of  the  number  of  intermediaries  required 
in  your  distribution  system  may  depend  upon  your  answer  to 
this  question. 

If  you  can  afford  to  ship  in  single  units  you  may  be  able  to 
sell  direct  to  consumers  by  mail. 

If  you  can  compete  only  when  shipping  in  case  lots  you  will 
not  be  able  to  sell  direct  to  consumers  by  mail  but  you  may  be 
able  to  sell  direct  to  dealers  or  to  your  own  salesmen  or  can- 
vassers in  tHis  territory.  If,  however,  you  can  compete  only 
when  shipping  in  carload  lots,  it  will  be  necessary  to  have  an 
intermediary  in  that  .territory  to  receive  the  carload  and  to 
assemble,  assort,  and  deliver  in  smaller  lots. 

This  intermediary  may  be  of  your  own  organization  or  out- 
side, depending  upon  the  other  conditions  which  we  have  just 
been  discussing. 

Thus  we  see  that  our  channels  of  distribution  are  very  much 
like  the  Missouri  River.  They  are  constantly  changing  their 
courses.  There  are  a  few  fundamental  conditions  relating  to 
articles  themselves  and  to  markets  which  determine  the  general 
direction.  If  an  opening  is  made  here  or  an  obstacle  removed 
there,  in  a  moment,  almost  over  night,  our  goods  will  be  found 
flowing  over  a  new  course.  New  methods  of  transportation,  new 
methods  of  credits,  and  new  habits  of  people  affect  these  chan- 
nels. But  in  the  end  the  different  channels  all  lead  in  the  same 
direction  and  our  goods  are  finally  delivered  to  the  father  of 
waters,  the  ultimate  consumer. 


C.     CONDITIONS  RELATING  TO  CLASSES  OF 
DISTRIBUTORS 

If  you  find  that  the  nature  of  your  article  and  the  market 
calls  for  sale  through  retailers,  the  next  question  is  to  determine 
the  classes  of  dealers  through  whom  it  is  most  profitable  to  dis- 
tribute. 

To  some  manufacturers  the  answer  to  this  question  is  a  very 
easy  one.  Groceries  should  be  sold  through  grocery  stores,  drugs 
through  drug-stores,  furniture  through  furniture  dealers,  and 
jewelry  through  jewelers.  But  are  there  not  others  who  can 
profitably  distribute  your  product?  There  are  said  to  be  less 
than  22,000  jewelry  stores  in  the  United  States,  yet  the  Ingersoll 
watch  is  sold  by  from  60,000  to  100,000  dealers. 

There  seems  to  be  constant  mixing  of  lines. 

I  know  a  dealer  in  optical  supplies  who  makes  a  nice  profit 
on  a  line  of  candies. 

There  are  said  to  be  in  the  United  States  over  750,000  retail 
distributors.  The  number  in  the  principal  lines  is  about  as  fol- 
lows : 

Agricultural  Implements   15,000 

Boots  and  Shoes  20,000 

Clothing    22,000 

Groceries    171,000 

Furniture    27,000 

Drugs    43,000 

Dry  Goods   32,000 

Hardware   30,000 

Jewelry    21,000 

Men's  Furnishings   8,000 

Stationery  and  Books 12,000 

Besides  these  are  over  1,700  department  stores  and  155,000 
general  stores.  New  and  efficient  distributing  agencies  are 
springing  up  every  year.  There  are  now  over  20,000  automo- 
bile supplies  distributors. 

Your  product  may  be  amenable  to  sale  through  only  one  of 
these  groups  or  it  may  be  more  profitably  sold  by  many. 

97 


98  THE  CHANNELS  OF  DISTRIBUTION 

1.  Which  group  of  distributors  comes  most  closely  in  contact  with 

consumers  when  purchasing  competing  or  associated  classes 
of  goodsf 

A  furniture  manufacturer  makes  high-grade  humidors  and 
sells  them  to  furniture  dealers. 

He  finds,  however,  that  his  most  active  distributors  are  cigar 
dealers  and  clubs  where  cigars  are  sold.  Up  to  recently  his  sales 
effort  was  directed  entirely  to  furniture  dealers.  The  returns 
are  found  to  be  so  much  greater  from  the  cigar  dealers  that  he 
says  he  feels  almost  as  though  he  had  been  "barking  up  the 
wrong  tree." 

Many  other  similar  stories  might  be  related. 

2.  Which  group  can  distribute  your  product  most  rapidly? 

The  modern  tendency  among  manufacturers  of  goods  of 
steady  consumption  seems  to  be  to  place  them  in  as  many  stores 
of  as  many  kinds  as  possible. 

There  are  strong  prejudices,  of  course,  against  selling  cer- 
tain goods  outside  of  what  might  be  considered  their  regular 
channels.  In  many  cases  these  prejudices  are  fast  dying  away. 

The  story  is  told  of  Jap-A-Lac  that  at  first  it  was  sold  only 
through  paint  dealers.  Now  a  paint  dealer,  it  must  be  remem- 
bered, comes  in  contact  with  his  trade  only  once  or  twice  a  year. 

The  next  step  was  to  distribute  Jap-A-Lac  through  drug- 
stores, which  come  in  contact  with  consumers  much  oftener. 
When  some  one  suggested  selling  Jap-A-Lac  through  the  grocers, 
the  manufacturers  first  felt  that  the  move  would  cheapen  the 
reputation  of  the  product.  Against  this  danger  was  placed  the 
assertion  that  grocers  are  "daily  distributors,"  while,  unless  a 
druggist  attracts  trade  by  performing  the  office  of  a  corner 
waiting-place,  a  customer  is  not  often  compelled  to  buy  from 
a  druggist  more  regularly  than  once  a  week.  It  was 
also  argued  that  few  druggists  make  deliveries.  So,  just  as  it 
was  found  necessary  to  add  drug-store  distribution  to  paint- 
store  distribution  to  increase  the  repeat  of  the  article,  it  was 
decided  to  add  grocery-store  distribution.  And  this  move  is  said 
to  be  one  of  the  greatest  causes  of  the  success  of  this  product. 


CONDITIONS  RELATING  TO  DISTRIBUTORS  99 

Please  notice  that  while  the  paint  dealers  come  more  closely  in 
contact  with  consumers  when  purchasing  competing  or  associated 
products  (and  are  therefore  still  used),  the  grocers  are  able  to 
distribute  the  product  more  rapidly. 

In  this  connection  the  way  the  distributor  will  display  your 
goods  must  be  considered. 

Your  article  may  be  one  absolutely  demanding  display. 

A  manufacturer  recently  told  me  that  he  had  stopped  making 
an  effort  to  sell  to  hardware  stores  and  confined  his  sales  effort 
to  druggists  because  hardware  dealers  as  a  rule  would  not  prop- 
erly display  his  goods. 

Another  manufacturer,  when  I  asked  him  what  class  of 
dealers  were  his  most  profitable  distributors,  whimsically  replied, 
"We  display  our  goods  in  drug-stores,  but  we  make  the  most 
sales  through  grocery  stores." 

A  careful  study  of  the  different  classes  of  dealers  will  greatly 
assist  you  in  answering  this  most  important  question  in  regard 
to  the  distribution  of  your  product. 

When  you  have  chosen  your  markets  and  your  most  profit- 
able channels  of  distribution,  then  and  not  until  then  are  you 
ready  to  consider  the  advertising  media  best  suited  to  reach  these 
markets  and  to  influence  consumers  to  buy  from  these  distrib- 
utors. 

The  choice  of  media  will  be  taken  up  in  Part  IV. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
BERKELEY 

Return  to  desk  from  which  borrowed. 
This  book  is  DUE  on  the  last  date  stamped  below. 


MAY  26  1948 


FEB     3  1950 
fl* 


T.N?1'36! 

> 

290ct'64JD 
REC'D  LD 

IWSTJP    OfcT  2 1*64-11  AM 


JAN  22  1958 


LD  21-100m-9,'47(A5702sl6)476 


YC  25888 


HF 

58S/ 

M4- 
no.  I - 


THE  UNIVERSITY  OF  CALIFORNIA  UBRARY 


